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TORONTO — Altus Group’s latest report on the CRE market found a majority of respondents (69 per cent in the U.S. and 67 per cent in Canada) described the near-term operating environment as “somewhat challenging,” consistent with the sentiment expressed the prior quarter in both markets.

The firm released the findings from its Q3 2024 CRE Industry Conditions and Sentiment Survey, a quarterly survey that collects insights on current market conditions and future expectations. The latest survey draws on feedback from 437 CRE specialists representing over 163 firms in the U.S. and Canada from July 11 to Aug. 6.

The survey found their primary focus over the next six months will remain on managing existing portfolios and exposures, with an uptick in respondents indicating they plan to deploy capital (up 11 percentage points in the U.S. and up two percentage points in Canada over the prior quarter).

A significant majority of respondents (89 per cent in the U.S. and 75 per cent in Canada) signalled an intent to engage in deals over the next six months, nearly 10 percentage points higher than last quarter for both countries.

Across the largest property sectors in the U.S., participants increasingly described current pricing as being “priced about right,” while in Canada respondents still characterized much of the market as largely “overpriced.”

Industrial and multifamily asset classes continued to be ranked as best performers, with office consistently ranked as a worst performer.

The cost of capital/interest rates remained as the top concern, reflecting overall low expectations for capital availability.

“The survey results revealed lingering concerns in the commercial real estate market in Q3, though there was increasing optimism about future improvements,” commented Altus Group director of research Omar Eltorai in a statement. “While CRE transaction activity remained muted in the face of high borrowing costs and expectations of impending interest rate cuts, last week’s rate cut in the U.S. should boost investor sentiment, potentially encouraging those on the sidelines to re-engage with the market.”