The survey, conducted in late September, reveals a sector grappling with a 5% yield on 10-year Treasury notes—a full percentage point increase over the previous year. This tightening environment has effectively silenced optimism across all nine core metrics tracked by the index. For the first time since 2022, borrower demand has turned net negative, while investor appetite has lost its positive momentum.

Economic anxiety is the primary driver of the downturn, with 62% of respondents anticipating a weaker U.S. economy over the next year. Interest rates remain the most significant point of contention; 92% of board members expect current mortgage and cap rates to act as a drag on business performance. Raj Aidasani, Managing Director at CREFC, noted that these concerns now extend beyond federal policy, focusing heavily on fiscal deficits and the stubborn reality of high long-term borrowing costs. As refinancing pressures mount for loans issued in 2017 and the 2021-2022 vintages, industry leaders are bracing for continued distress, particularly within the office and multifamily sectors.