Commercial broker sentiment diverged sharply from residential sentiment in the first quarter of 2023. The commercial Current Confidence Index (CCI) fell to -74.7. The Expectations Index (EXI) also dropped, falling from -20.7 to -56.9. Both were new lows. In contrast, the Q1 2023 residential broker sentiment held up relatively well. The residential Expectations Index (EXI) inched lower, dropping from 12.9 to 11.7. While it stayed in negative territory, the residential Current Confidence Index (CCI) increased from -19.4 to -5.6.
Challenging conditions in the office sector were to blame, with borrowing costs at their highest in more than a decade. As it is, most major banks are reluctant to expand their office loan portfolio. The office sector has overcome significant financial crises in prior cycles. The uncertainty regarding how quickly demand for office space will return to pre-pandemic norms is unprecedented, though.