C
ommercial real estate finance optimism is surging, according to the CRE Finance Council's (CREFC) latest Board of Governors Sentiment Index. The index jumped 27.8% in Q2 2025, reaching 112.3, a significant recovery from the steep decline earlier this year.
Industry leaders are regaining confidence due to economic stability, improved capital markets, and growing demand across the real estate sector. "The turnaround highlights our industry's resilience and adaptability," said Lisa Pendergast, CREFC President and CEO. "Challenges remain, but the market is gaining traction."
Key findings from the Q2 2025 Index include:
* Only 27% of respondents expect worsening economic conditions in the next year, down from 80% last quarter.
* 49% now expect government actions to have a positive impact, up from 11% in Q1.
* Optimism around interest rates grew, with 38% citing a positive impact.
* Just 19% see CRE fundamentals worsening, down from 50% last quarter.
Transaction activity is rebounding, with 65% expecting an increase and only 3% forecasting a decline. Financing demand is also expected to rise, with 86% predicting greater borrower demand. Market liquidity is expected to improve or hold steady for 92%.
Emerging trends and risks include geopolitical risk (36%) and macroeconomic slowdown (28%). However, 71% reported an increasing appetite for CRE lending and investment in the second half of 2025. AI-driven data center demand is a major driver of optimism, with 72% expecting a positive effect on the broader market.
