National Association of REALTORS® (NAR) announced the launch of its Commercial Real Estate (CRE) Demand Index, a quarterly index designed to measure the economic drivers of commercial real estate demand across more than 300 U.S. metropolitan areas.
The CRE Demand Index combines publicly available government data to produce demand scores across four property-specific measures, as well as an overall market score:
- Office: growth in professional and business services employment.
- Industrial: manufacturing, transportation and warehousing employment growth.
- Retail: growth in retail trade and leisure and hospitality employment.
- Multifamily: population growth and net migration, both domestic and international.
Rather than measuring current property-market conditions such as vacancy rates, rents or leasing activity, the CRE Demand Index focuses on the local economic conditions that can generate demand for commercial space and provides an early view of market trends before they are reflected in traditional commercial real estate indicators such as leasing activity and vacancy rates.
“Commercial real estate demand begins with what’s happening in the local economy,” said Nadia Evangelou, Principal Economist & Director of Real Estate Research at NAR. “Demand starts before a lease is signed. It starts with jobs and people. The CRE Demand Index helps identify those trends earlier, before they’re reflected in traditional market indicators.”
The index covers 306 metropolitan areas and compares each metro with the others each quarter. A score of 100 represents the average metro. Scores above 100 indicate stronger demand drivers relative to other markets, while scores below 100 indicate weaker relative momentum. A score below 100 does not necessarily mean that a market is shrinking.
Key findings from the inaugural CRE Demand Index include:
- St. George, Utah, ranks as the No.1 overall metro with an index score of 128.
- South Carolina ranks as the nation’s strongest state for commercial real estate demand, reflecting continued momentum across the Carolinas.
- Raleigh, North Carolina, with an index score of 121, ranks highest among the nation’s 50 largest metro areas and is stronger today than it was in 2022 during the peak of the pandemic-era migration boom.
“The top markets are performing well across more than one commercial real estate sector. Since 2022, the leaders have also changed, with some pandemic-era standouts cooling while several smaller metros have moved up.”
The CRE Demand Index will be updated quarterly, with historical data available back to 2022.
The full Commercial Real Estate Demand Index, including metro-level rankings, sector-specific scores, historical trends and methodology, is available at https://www.nar.realtor/research-and-statistics/commercial-real-estate-demand-index.
