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The commercial real estate market has been through a lot over the past few years. The pandemic changed how people work, shop, and even where they live. While some parts of the market have recovered, others are still adjusting. And the reality is that commercial real estate doesn't change overnight. Before demand increases for office buildings, warehouses, shopping centers, or apartments, it usually shows up first in the local economy. Businesses hire, people move in, and jobs are created. Those changes eventually create demand for commercial space.

That's why NAR developed the Commercial Real Estate Demand Index.

The index measures the local economic conditions across more than 300 metropolitan areas. Instead of focusing on leasing activity or vacancy rates, it combines four property-specific measures, using publicly available government data:

  • Office: growth in professional and business services employment.
  • Industrial: manufacturing, transportation and warehousing employment growth.
  • Retail: growth in retail trade and leisure and hospitality employment.
  • Multifamily: population growth and net migration, both domestic and international.

The four sectors are then combined into a single index, with a greater weight assigned to industrial and multifamily demand because those sectors have accounted for a larger share of commercial real estate activity in recent years.

A quick note on how to read the index: a value of 100 represents the average metro. A market at 110 has demand drivers growing faster than most of the country. A market at 90 is growing more slowly than most, but that doesn't mean the area is shrinking. Many markets below 100 are still adding jobs and residents, just more slowly than the typical metro.

A Snapshot

1. Top Markets

The first finding is that the markets that stand out perform well in more than one commercial real estate sector. St. George, Utah ranks first overall with an index of 128. It has the strongest office employment growth in the country, paired with some of the fastest population growth and in-migration anywhere. It also scores above average on industrial demand. In other words, this is not a one-industry story.

Fayetteville-Springdale-Rogers, Arkansas (125) and Huntsville, Alabama (125) follow close behind, and Fayetteville is the clearest example of broad-based growth in the whole index. It ranks first in the nation for retail demand while also scoring above average in office and multifamily. Huntsville has one of the strongest multifamily scores in the country while also performing well in retail and industrial demand. Ocala, Florida (123), Raleigh-Cary, North Carolina (121), Sherman-Denison, Texas (121), Lakeland-Winter Haven, Florida (121), and Grand Forks, North Dakota-Minnesota (121) round out the top of the list, each of them growing across several sectors rather than relying on a single industry.

Smaller markets such as Sherman-Denison, Lakeland-Winter Haven, Wilmington, North Carolina, and Spartanburg, South Carolina come up on the list alongside much larger metropolitan areas. That does not mean these markets have more commercial real estate than larger cities. It indicates stronger recent economic momentum relative to other metro areas.

2. Top Markets by Property Type

Looking at each property type separately shows that different markets lead for different reasons. For office demand, St. George, Utah; Grand Forks, North Dakota-Minnesota; Waco, Texas; Sherman-Denison, Texas; and Wichita Falls, Texas, rank among the strongest markets based on growth in professional and business services employment.

Industrial demand is led by Salem, Oregon; Fairbanks, Alaska; Olympia-Lacey-Tumwater, Washington; Lexington Park, Maryland; and Baton Rouge, Louisiana, where manufacturing, transportation, and warehousing employment have expanded faster than in most metro areas.

Retail demand is strongest in Fayetteville-Springdale-Rogers, Arkansas; Gainesville, Georgia; Auburn-Opelika, Alabama; Napa, California; and Bangor, Maine, reflecting growth in both retail trade and leisure and hospitality employment.

For multifamily demand, a group of markets sits at the top of the scale: Huntsville, Alabama; Ocala, Florida; Lakeland-Winter Haven, Florida; Wilmington, North Carolina; Myrtle Beach, South Carolina; Spartanburg, South Carolina; and Punta Gorda, Florida. All of them lead the country in population growth and net migration.

Looking at the index by area over the years, a few things stand out about the broader trend.

The Trend

1. The 2021 boomtowns have cooled off

Let's start with Austin. In 2022, Austin scored 132, the highest of any large metro in the country. Today, that index has dropped to 116. That's still a strong market, better than about 95% of metros, but the gap between Austin and other markets has been closing for four straight years. Hiring in professional services slowed down, and so did the flow of people moving in.

Florida has followed a similar pattern. The state's metros averaged 115 in 2022 compared with 110 now. The markets that boomed the fastest have cooled the most. Naples is down 29 points since 2022 and now has an index below the national average, at 95. Punta Gorda has fallen 28 points in the past year, though it remains above average at 106. Panama City has dropped 19 points in the past year, and Sebastian-Vero Beach is down 24 points since 2022. Even Miami, which held up longer than the rest of the state thanks to international migration, dropped below 100 this past year for the first time since we've been tracking it, to 96. Bozeman, Montana is another example. It's at 99 now, just below average, after falling 16 points in a single year.

But to be clear, most of these markets are still growing. People are still moving to Florida. But the momentum that drove these markets to expand a few years ago has slowed, returning to more normal conditions.

2. The Carolinas continue to gain momentum

Some of that demand seems to have moved up the coast. South Carolina is now the strongest state in the index. Its five metros average 110, ahead of Florida, Texas, and Utah. North Carolina has gone from 104 in 2022 to 106 today, moving in the opposite direction from most of the Sun Belt. Raleigh is the standout among large metros: 114 in 2022, 117 in 2024, and 121 now, one of the few major markets that is stronger today than it was at the height of the migration boom. Charlotte has increased to 110. Wilmington and Spartanburg have some of the strongest population and migration numbers anywhere in the country. Whatever attracted people to Florida in 2021 seems to be attracting them to the Carolinas now.

3. Texas is shifting, not slowing

Texas overall has improved, from an average of 104 in 2022 to 108 now. But the bigger story is what changed inside the state. As Austin cooled, a group of smaller Texas metros took off. Waco is at 113 after gaining 17 points in a year. Abilene is at 117, Sherman-Denison at 121, and Wichita Falls picked up 24 points in the past year to reach 106. Dallas-Fort Worth and Houston have held steady in the 111 to 112 range the whole time. And for markets of that size, growing faster than average year after year matters a lot.

4. The gateway markets

San Francisco has been the weakest big market for most of this period, but it is showing the first real signs of improvement since the pandemic. The index fell from 92 in 2022 to 87 in 2024, and it's back up to 93, still below average, but moving in the right direction, and up 7 points in the past year alone.

The other gateways went the other way. New York and Washington both improved through 2024, with Washington reaching 104, and then moved down again over the past year. Both are now at about 96, with Boston at 97. Los Angeles hasn't really moved at all. It's been sitting in the low 90s for four years, and it's at 91 today. So, if there's a gateway comeback underway, the Bay Area is the only area, based on the data.

And a few surprises

Some of the biggest gains are in markets that don't usually make the national lists. Grand Forks, North Dakota has added 35 points since 2022, more than any other metro, and now scores 121, which puts it in the national top 10. Lake Charles, Louisiana is up 28 points, and Lexington Park, Maryland is up 23 points over the same period. Over the past year alone, Fort Collins, Colorado gained 29 points to reach 114. Even in the Midwest, the weakest region in the index overall, with Illinois, Iowa, and Wisconsin metros averaging around 88 to 92, Springfield, Missouri, and Bloomington, Indiana, both moved above 100 this year.

These are smaller markets, and a good year, for example, in Grand Forks probably won't show up in national numbers. But locally, a shift like that matters a lot, and it can make the difference between space sitting empty and space getting leased.


Methodology

The index is built from public government data and updated quarterly. Employment comes from the Bureau of Labor Statistics (professional and business services; transportation, warehousing and manufacturing; retail trade and leisure and hospitality), measured as year-over-year growth in quarterly average payrolls. Population growth and net migration, domestic and international, come from the Census Bureau's Population Estimates Program.

Each driver is scored against the average of all 306 metro areas, combined into four sector sub-indices and weighted 22% office, 28% industrial, 22% retail, and 28% multifamily. The result is rescaled so that 100 equals the average metro and every 15 points equals one standard deviation. The index covers 306 metropolitan statistical areas quarterly from 2022 through the second quarter of 2026. It measures the local economic conditions that generate demand for space, not vacancy, rents, or absorption, and it compares metros with each other rather than with the nation as a whole./em>