NAR Commercial Real Estate Demand Index Identifies St. George and Raleigh as Top Growth Markets
According to data released by the National Association of Realtors (NAR), St. George, Utah, ranks as the top metropolitan market for future commercial real estate demand, driven by robust office employment growth and migration trends. The new index evaluates over 300 U.S. markets across office, industrial, retail, and multifamily sectors.
The Bottom Line
- The Top Metros: St. George, Utah, claimed the No. 1 spot with an index score of 128, while South Carolina emerged as the leading state for commercial demand.
- Pandemic Shift: Formerly overheated markets like Austin, Texas, and Miami have cooled significantly since their 2022 peaks, ceding momentum to secondary and tertiary regions.
- Leading Large Market: Raleigh, North Carolina, posted an index score of 121, standing as the only major U.S. metro showing stronger metrics today than during the 2022 migration boom.
Economic Drivers Behind the NAR Commercial Real Estate Index
Commercial real estate metrics traditionally lag behind broader economic shifts, tracking concrete variables like signed leases and vacancy rates after the fact. To counter this delay, the National Association of Realtors launched its quarterly Commercial Real Estate (CRE) Demand Index, tracking local economic indicators across 306 metropolitan areas.
Rather than evaluating empty floor space, the index aggregates government data from the Bureau of Labor Statistics and the Census Bureau to measure the foundational elements of demand. According to Nadia Evangelou, principal economist and director of real estate research at NAR, demand begins with jobs and people long before a lease is executed.
“Demand starts before a lease is signed. It starts with jobs and people,” Evangelou noted, explaining how the index provides an early view of market trajectories.
Sector Breakdown and Geographic Redistribution
The index evaluates four distinct property sectors using targeted economic inputs:
- Office: Evaluates growth in professional and business services employment. St. George, Utah, led the nation in this category.
- Industrial: Measures manufacturing, transportation, and warehousing employment growth, with regions like Salem, Oregon, and Fairbanks, Alaska, securing top rankings.
- Retail: Tracks retail trade alongside leisure and hospitality employment growth.
- Multifamily: Incorporates population growth and domestic and international net migration figures.
The resulting baseline utilizes a score of 100 to represent the average metro. Scores exceeding 100 signal stronger relative momentum, while figures below 100 reflect softer economic drivers rather than outright contraction.
Comparative Index Scores Across Key U.S. Markets
| Metropolitan Area / Region | Index Score / Status | Primary Sector Strengths |
|---|---|---|
| St. George, Utah | 128 (No. 1 Overall Metro) | Office employment, in-migration, industrial demand |
| Raleigh, North Carolina | 121 (Top Major Metro) | Outperforming 2022 peak levels, broad economic momentum |
| South Carolina (Statewide) | Ranked Highest Nationally | Industrial and manufacturing growth, sustained Carolinas momentum |
| New York & San Francisco | Below Average Relative Momentum | Lagging fast-growing Sunbelt and smaller markets |
Investor Implications for Secondary and Midsized Metros
The data points toward a structural reallocation of capital away from traditional gateway coastal cities toward high-growth secondary markets. While large coastal centers such as New York and San Francisco continue to exhibit relative softness, smaller and midsized metros are capturing outsized shares of economic momentum.
Evangelou highlighted locations such as Fayetteville, Arkansas; Huntsville, Alabama; and Spartanburg, South Carolina, as prime examples of smaller markets offering robust fundamentals. Huntsville, for instance, maintains one of the strongest multifamily scores nationwide, driven by high-tech defense and aerospace employment expansion.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
