The National Association of Realtors is trying to give commercial property investors an earlier read on where demand is heading, rather than where it has already been. The trade group this week launched a quarterly Commercial Real Estate Demand Index that measures the economic forces driving demand across 306 U.S. metropolitan areas, ranking St. George, Utah, first in the nation.
Unlike traditional gauges such as vacancy rates or asking rents, which describe conditions that have already materialized, the index tracks the underlying drivers of demand β jobs and people β that tend to show up in leasing and sales later.
How the index works
The index draws on publicly available government data to score each metro against the average of all 306 markets, where 100 is the baseline. A reading above 100 signals stronger relative demand momentum; below 100 indicates weaker momentum than peers. NAR combines four sector sub-indices, each built from a different set of economic drivers:
Office demand is measured by growth in professional and business services employment; industrial by manufacturing, transportation and warehousing jobs; retail by retail trade and leisure and hospitality employment; and multifamily by population growth and net migration, both domestic and international.
“Demand starts with jobs and people” before it shows up in traditional market indicators, said Nadia Evangelou, principal economist and director of real estate research at NAR. The index maintains historical data back to 2022 and will be updated quarterly.
Where demand is strongest
St. George, Utah, topped the overall ranking with a score of 128, powered by some of the strongest office-employment growth in the country. South Carolina ranked as the strongest state for commercial real estate demand.
Among the nation’s 50 largest metropolitan areas, Raleigh, North Carolina, ranked highest with a score of 121 β stronger, NAR said, than its performance at the 2022 pandemic-era peak. The results point to a continued shift of commercial demand toward fast-growing Sun Belt and mountain-region markets, where population inflows and job growth have outpaced the larger, more established coastal metros.
A tool for a bifurcated market
The launch comes as commercial real estate navigates an uneven recovery. Industrial demand has remained resilient, supported by e-commerce and large portfolio trades, while office has grappled with a years-long supply-demand imbalance that only recently began to stabilize in stronger markets. A demand gauge built on employment and migration is designed to help investors and brokers distinguish markets with durable growth from those riding temporary momentum.
What it means: For investors and developers, the value of a forward-looking index is in spotting demand before it is priced into rents and vacancies β potentially flagging secondary and tertiary markets like St. George well before they appear on national radar. The approach has limits: employment and migration data capture the demand side but say nothing about local supply, construction pipelines or capital costs, all of which determine whether rising demand actually translates into higher rents and values. Used alongside conventional metrics, though, the index gives the industry another lens on a commercial real estate market where location increasingly separates winners from laggards.
NAR is one of the largest trade organizations in the country and produces widely followed data on both residential and commercial real estate.
