NAR’s New Index Aims to Show Where Commercial Demand Is Headed, Not Where It Has Been

The commercial real estate industry does not lack for market data. Vacancy rates, absorption figures, rent growth, cap rate movement, and transaction volume all get tracked closely and published on a reliable cadence. What most of that data has in common is that it describes conditions that already exist. By the time a vacancy rate moves, the leases driving it were signed months earlier, and the decisions behind those leases were made earlier still.

The National Association of REALTORS launched a Commercial Real Estate Demand Index in August that attempts to work further upstream. Rather than measuring the property market, it measures the local economic activity that eventually produces demand for space, covering 306 metropolitan statistical areas on a quarterly basis with history back to 2022.

“We are not measuring vacancy, transactions, or rent growth. Those are important but we want things that are leading up to those,” said Nadia Evangelou, Principal Economist and Director of Real Estate Research at the National Association of REALTORS. “Two markets might have the same vacancy rate but one might be growing and one might be completely stagnant.”...

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RSK: Unique and smart way to measure CRE growth....but why didn't the author include the rankings? I would like to see where Madison falls in the ranks.