Quarterly index examines economic conditions driving demand for office, industrial, retail and multifamily properties in 306 metropolitan areas
WASHINGTON — The National Association of REALTORS® has launched a new Commercial Real Estate (CRE) Demand Index designed to provide an early look at where commercial real estate demand is building across the United States.
The quarterly index evaluates economic conditions that can drive demand for commercial space across 306 U.S. metropolitan areas, rather than focusing on traditional property-market measures such as rents, vacancy rates or leasing activity.
According to NAR, the index is intended to identify shifts in local economic momentum before they become visible in conventional commercial real estate indicators.
“Commercial real estate demand begins with what’s happening in the local economy,” said Nadia Evangelou, NAR’s principal economist and director of real estate research. “Demand starts before a lease is signed. It starts with jobs and people.”
The index assigns scores across four major property sectors:
- Office: Growth in professional and business services employment.
- Industrial: Growth in manufacturing, transportation and warehousing employment.
- Retail: Growth in retail trade and leisure and hospitality employment.
- Multifamily: Population growth and net migration, including domestic and international migration.
The four sector measures are combined into an overall market score.
Utah metro leads inaugural rankings
In the inaugural index, St. George, Utah, ranked as the nation’s strongest overall metropolitan market, with a score of 128.
South Carolina ranked as the strongest state for commercial real estate demand, reflecting continued economic momentum across the Carolinas.
Among the country’s 50 largest metropolitan areas, Raleigh, North Carolina, ranked highest with a score of 121. NAR noted that Raleigh’s current performance is stronger than it was in 2022, when pandemic-era migration was driving substantial growth in many markets.
“The top markets are performing well across more than one commercial real estate sector,” Evangelou said. “Since 2022, the leaders have also changed, with some pandemic-era standouts cooling while several smaller metros have moved up.”
A different way to measure demand
Unlike measures that look at how much office or retail space is currently available, the CRE Demand Index focuses on the economic forces that can create future demand.
For example, an increase in professional-services employment could signal growing demand for office space, while rising manufacturing and transportation employment could point toward greater demand for industrial properties.
Similarly, population growth and migration patterns can provide an indication of future demand for multifamily housing.
A score of 100 represents the average metropolitan area. Markets scoring above 100 have stronger demand drivers relative to other metros, while scores below 100 indicate weaker relative momentum.
NAR cautions that a score below 100 does not necessarily mean a market is shrinking. Rather, it indicates that its demand drivers are weaker compared with other metropolitan areas.
The index is based on publicly available government data and includes historical information dating back to 2022, allowing users to track how the relative strength of markets has changed over time.
Quarterly updates planned
NAR plans to update the CRE Demand Index quarterly, providing real estate professionals, investors and other market participants with a recurring measure of the economic conditions shaping commercial real estate demand.
The organization said the index is intended to complement—not replace—traditional commercial real estate data.
Commercial property markets have continued to show different trends across sectors. NAR’s recent commercial real estate research has found, for example, that multifamily demand has remained comparatively strong while office markets have continued to face elevated vacancy, illustrating why economic drivers can vary significantly by property type.
The new index offers a way to look further upstream at those trends by examining the jobs and population changes that can precede changes in property-market conditions.
The full Commercial Real Estate Demand Index, including metropolitan rankings, sector-specific scores, historical trends and methodology, is available through NAR’s Commercial Real Estate Demand Index.
