NAR's New CRE Index: St. George, Utah Tops US Demand Rankings

Key points

• NAR introduced a new quarterly index measuring commercial real estate demand across 306 US metros using economic data from the Bureau of Labor Statistics and Census Bureau.
• The index evaluates four sectors: office (professional services employment), industrial (manufacturing/transportation), retail (trade/hospitality), and multifamily (population/migration).
• St. George, Utah, ranks No. 1 nationally with a score of 128, driven by the strongest office employment growth and above-average industrial demand.
• South Carolina is the strongest state, with its five metro areas averaging a score of 110, outperforming Florida, Texas, and Utah.
• Raleigh, North Carolina, is the only major US market stronger today than it was in 2022, with a score of 121, while former hotspots like Austin and Miami have cooled.
• Small and mid-sized markets like Fayetteville, Arkansas, and Huntsville, Alabama, are showing broad-based growth across multiple sectors, outperforming traditional gateway cities.

Background

This development follows a period of shifting commercial real estate dynamics, where traditional metrics like vacancy rates and lease activity have been slow to reflect underlying economic changes. The new index aims to provide an earlier signal of demand by tracking employment and population trends before they translate into leasing activity. This is particularly relevant as mortgage rates have remained elevated, cooling homebuyer demand, and as commercial AI demand surges, potentially impacting office and industrial sectors differently. The index also highlights a shift in migration patterns, with the Carolinas gaining momentum as Florida's rapid growth normalizes.

How outlets are covering it

All sources agree on the core findings of the NAR index, but they emphasize different aspects. CNBC and NAR highlight the index's utility as an early indicator of demand, with NAR stressing that demand often builds in the local economy before appearing in vacancies or lease rates. Scotsman Guide focuses on the surprise ranking of St. George, Utah, and the cooling of former Sun Belt hotspots like Austin and Miami, noting that while these markets are still growing, their pace has slowed. RISMedia provides a concise overview of the index's methodology and key findings, emphasizing its quarterly nature and the availability of historical data back to 2022. The sources also differ in their emphasis on specific markets: CNBC and NAR highlight the strength of the Carolinas, while Scotsman Guide notes the strong performance of smaller markets like Fayetteville and Huntsville.

Why it matters

The NAR Commercial Real Estate Demand Index provides a new tool for investors and practitioners to identify emerging opportunities in commercial real estate by tracking local economic drivers before they manifest in traditional market indicators. This is particularly important as the market continues to shift, with smaller and mid-sized markets showing stronger momentum than traditional gateway cities. The index can help investors and practitioners make more informed decisions about where to allocate capital and where to expect future demand for office, industrial, retail, and multifamily properties.

What to watch

The NAR will update the Commercial Real Estate Demand Index quarterly, providing ongoing insights into the economic drivers of commercial real estate demand across 306 US metropolitan areas. Investors and practitioners will likely use the index to identify emerging opportunities and to monitor the shifting dynamics of the commercial real estate market, particularly as the pace of growth in Sun Belt markets normalizes and new hotspots emerge.