The CRE Finance Council (CREFC) said its First-Quarter 2026 (1Q26) Board of Governors (BOG) Sentiment Index fell 20.2% to 100.1 from 125.4 in Q4 2025, essentially returning to the survey’s Q4 2017 baseline of 100.0 and erasing gains accumulated over the prior three quarters.
The decline was broad-based, with all nine core questions deteriorating quarter-over-quarter, according to CREFC. The sharpest pullbacks came from views on rates, overall industry sentiment, liquidity and the economic outlook.
Conducted from April 7-13, the survey captured a sharp shift in sentiment driven by the onset of the Iran war and its cascading effects on interest rates, transaction pace and the macroeconomic outlook, CREFC said. Demand-side readings held up better than the rates and macro questions, even as they moderated from the highs seen in the prior quarter.
“This quarter’s results reflect a market absorbing a significant geopolitical shock,” said Lisa Pendergast, president and CEO of CREFC. “The 20% decline in the index tells us that respondents are recalibrating expectations across the board, from rates to liquidity to the macro-outlook. But the underlying demand signals remain constructive: borrowers still need to refinance, investors are still looking to deploy capital and fundamentals outside of office are holding. The question is whether the current uncertainty becomes a temporary pause or something more persistent. Our members are preparing for both scenarios.”
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