Confidence among commercial real estate leaders has reached its lowest level since 2009, reports the Real Property Association of Canada (REALpac) and the FPL Advisory Group.

According to the Fourth Quarter 2013 Canadian Real Estate Sentiment Survey, real estate leaders are concerned about the economy and a potential slowdown despite strong market fundamentals.

The survey measures the current and future outlook based on Canada’s top commercial real estate executives’ view of overall real estate conditions, values and availability of capital.

It found that many real estate leaders want to see higher interest rates, decreased transactional activity and cap rate decompression in the future. Respondents also indicated that if there are no meaningful improvements in the economy, current high asset values should ease up in the next year.

“With so many unknowns in the picture right now, including the slower-than-expected recovery in the U.S., it’s no surprise that there’s a mixed bag of sentiments among property leaders,” says Carolyn Lane, vice president at REALpac. “All eyes are on economic growth and the direction of interest rates, but at the same time investor demand remains strong and sources of equity capital are plentiful, except where REITs are concerned.”

The survey shows equity capital from private sources remains plentiful, though REITs are being impeded by current market conditions as their pricing power has weakened.