NAR Launches New Quarterly Index to Track Forward-Looking Commercial Real Estate Demand Across 306 Metros

The National Association of Realtors (NAR) has fundamentally shifted how the industry measures the future of commercial space, launching a new Commercial Real Estate (CRE) Demand Index that tracks 306 U.S. metropolitan areas. Instead of looking at empty buildings to gauge market health, the new quarterly tool looks at the people and jobs that will eventually fill them.

By prioritizing upstream economic drivers over lagging indicators like vacancy rates and completed leases, the index aims to give local buyers, owners, and developers a head start on identifying where demand is building before it becomes obvious to institutional capital.[1][2]

For decades, the standard playbook for evaluating commercial real estate relied heavily on rearview-mirror metrics. Investors and tenants would look at current rent rolls, trailing twelve-month absorption rates, and existing vacancy percentages to decide if a neighborhood was on the rise. The flaw in that approach is timing.

By the time a market shows a sustained drop in vacancy and a spike in asking rents, the opportunity to buy low or secure a favorable long-term lease has already vanished. The new NAR index attempts to solve this timing gap by tracking the root causes of spatial demand rather than the eventual symptoms.[2][3]

"Commercial real estate demand begins with what’s happening in the local economy," noted Nadia Evangelou, NAR’s principal economist and director of real estate research, during the launch. "Demand starts before a lease is signed. It starts with jobs and people."

To capture this, the methodology breaks the commercial market into four weighted sectors, tying each to a specific, localized economic engine using publicly available government data. By aggregating these data points, the index establishes a baseline score of 100 for the average American metro, allowing investors to instantly see which cities are accelerating faster than their peers.[2][4]

The specific weightings reflect the modern realities of commercial space usage. Office demand, which makes up 22 percent of the overall score, is tied directly to growth in professional and business services employment. Industrial demand carries a heavier 28 percent weight and tracks manufacturing, transportation, and warehousing jobs. Retail accounts for 22 percent, following retail trade and hospitality employment. Finally, the multifamily sector, weighted at 28 percent, is driven purely by population growth and net migration, capturing both domestic relocations and international arrivals.[1][2]

In its inaugural release, the data highlights a clear, quantifiable shift toward secondary and tertiary markets that are quietly capturing the nation's economic momentum. St. George, Utah, emerged as the strongest overall metropolitan market in the country, posting an index score of 128. On a state level, South Carolina took the top spot, reflecting sustained, broad-based growth across the Carolinas.

Among the nation’s 50 largest metros, Raleigh, North Carolina, led the pack with a score of 121. Notably, NAR researchers pointed out that Raleigh’s current economic drivers are actually stronger today than they were during the peak of the pandemic-era migration boom in 2022.[2][3][4]

The index also starkly illustrates the uneven nature of the current commercial recovery, providing a sobering counter-narrative for traditional coastal hubs. While smaller Sun Belt and Mountain West markets surge, major gateway cities like New York, Washington, D.C., Boston, and Los Angeles continue to trail the national average of 100.

Even San Francisco, which has shown recent signs of improvement after severe post-pandemic economic headwinds, remains below the baseline. For a renter deciding whether to sign a ten-year lease or a buyer looking for value-add opportunities, these relative scores provide a quantifiable map of where leverage currently sits between landlords and tenants.[2]

For a local business owner or a mid-sized investor, applying this data forces a strategic choice in how to underwrite a potential deal. Relying purely on traditional metrics offers the safety of current cash flow, which is often required by conservative commercial lenders.

However, utilizing the forward-looking index allows an investor to target a submarket where logistics jobs are booming but warehouse rents have not yet spiked. It empowers a local retailer to sign a lease in a neighborhood where demographic data shows a massive influx of new residents, even if the current foot traffic appears light.[1][2]

NAR emphasizes that the tool is designed to complement, rather than replace, traditional commercial real estate data. A score below 100 does not necessarily mean a local market is shrinking or facing a recession.

Many metros with sub-100 readings are still adding jobs and residents, but they are simply doing so at a slower pace than the national average. Furthermore, strong job growth does not guarantee immediate leasing success if a market is simultaneously dealing with a massive oversupply of new construction, a dynamic currently playing out in several Sun Belt industrial sectors.[1][4]

Ultimately, by making this data publicly available and committing to quarterly updates, NAR is democratizing the kind of predictive demographic modeling that was previously restricted to massive private equity firms and institutional developers. Local real estate practitioners now have a standardized, recurring measure to anchor their advice. Whether advising a client to sell an office building before demographic stagnation hits the rent roll, or pushing a buyer to acquire a multifamily lot in a surging secondary metro, the industry now has a unified metric to quantify the future.[2][3]