Key facts
- NAR has launched a quarterly Commercial Real Estate Demand Index.
- The index tracks early drivers of demand across 306 U.S. metro areas.
- It uses job growth in office, industrial, and retail sectors, plus population and migration for multifamily.
- The index provides a forward-looking view of local markets.
- Scores are relative, with 100 representing the average metro area.
The National Association of Realtors (NAR) has introduced a new quarterly Commercial Real Estate Demand Index designed to provide an early, forward-looking perspective on space demand across 306 U.S. metropolitan areas. This index aims to capture shifts in demand before they become apparent in traditional metrics like vacancy rates or rents.
The index is built using publicly available government data and focuses on local economic drivers. It comprises four subindices: office (weighted at 22%), which tracks growth in professional and business services employment; industrial (28%), focusing on manufacturing, transportation, and warehousing employment; retail (22%), based on retail trade and leisure and hospitality employment; and multifamily (28%), which considers population growth and net migration.
Each quarter, metro areas are compared against each other, with a score of 100 representing the average. Scores above 100 indicate stronger demand drivers relative to other markets, while scores below 100 suggest weaker momentum. NAR emphasizes that a sub-100 score does not necessarily imply contraction, but rather a slower pace of growth compared to the average market. Historical data for the index is available quarterly from 2022.