| National Association of REALTORS® yesterday launched its Commercial Real Estate (CRE) Demand Index, a quarterly data analysis measuring economic drivers across more than 300 U.S. metropolitan areas. The index combines publicly available government data to produce demand scores across four property-specific measures, as well as an overall market score, for the office, industrial, retail and multifamily sectors.
In the "Economist’s Outlook" blog, Nadia Evangelou, NAR principal economist and director of real estate research, explains the index was created to provide commercial practitioners with highly specific insights on where momentum and demand are building.
"The commercial real estate market has been through a lot over the past few years. The pandemic changed how people work, shop and even where they live. While some parts of the market have recovered, others are still adjusting. And the reality is that commercial real estate doesn’t change overnight," Evangelou says. "Before demand increases for office buildings, warehouses, shopping centers or apartments, it usually shows up first in the local economy. Businesses hire, people move in and jobs are created. Those changes eventually create demand for commercial space."
A few trends she’s seeing:
- The Carolinas continue to show strong momentum, with population and job growth demand across multiple property types.
- Texas remains strong overall, with growth spreading to a broader group of markets beyond the largest metros.
- Some of the biggest gains are showing up in smaller markets such as St. George, Utah; Grand Forks, N.D.; and Lake Charles, La., where stronger local economic momentum can quickly create new demand for commercial space.
- San Francisco is showing signs of improvement, giving practitioners an early indication that conditions may be starting to turn.
- Some pandemic-era boom markets, including Austin, Texas, and several Florida metros, have cooled from their earlier pace, suggesting conditions are becoming more normal.
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