T
he commercial real estate finance sector is experiencing a significant surge in optimism, according to the CRE Finance Council's Second-Quarter 2025 Sentiment Index. The index jumped 27.8% to 112.3, surpassing the neutral baseline of 100 and marking one of the strongest quarterly improvements on record.

    Renewed confidence is attributed to stabilizing interest-rate expectations and improving capital market conditions. The economic outlook has flipped positive, with only 27% of respondents expecting worse economic conditions over the next 12 months, a significant improvement from 80% last quarter.

    Market activity is also showing signs of recovery, with 86% of respondents being exceptionally bullish on financing demand, expecting more borrower interest. Investor demand soared, with 65% predicting an increase, and market liquidity shows a strong return, as 92% expect better or the same capital availability.

    Geopolitical shocks remain the top concern at 36%, followed by macroeconomic slowdown fears at 28%. However, a significant 71% of respondents reported an increasing appetite for new CRE lending or investment in the latter half of 2025. The emergence of AI-driven data center demand is also expected to have a positive impact on the overall CRE market, with 72% of respondents anticipating a positive outcome.

    Interest rate expectations have moderated, with 78% anticipating at least one 25 bps rate cut by year-end 2025. According to Lisa Pendergast, president and CEO of CREFC, "The turnaround in our Sentiment Index highlights the CRE finance industry's resilience and adaptability."