South Carolina ranks highest among all U.S. states in future potential demand for commercial real estate, according to a new index from the National Association of Realtors. The index, reported by CNBC, is designed to give commercial real estate investors a forward-looking read on where economic conditions may drive demand.
The index covers more than 300 metropolitan markets, with separate measures for the office, industrial, retail, and multifamily sectors. The NAR draws on government data from the Bureau of Labor Statistics and the Census Bureau for population and migration figures.
Each sector is measured differently. The office measure looks at growth in professional and business services employment. Industrial tracks manufacturing, transportation, and warehousing employment growth. Retail measures growth in retail trade as well as leisure and hospitality employment. Multifamily incorporates population growth and net migration, both domestic and international. All of that gets combined into a single index score.
"It doesn't say, 'OK, go there and just buy property,' but it says … where the data shows that the momentum is building, the demand is building," said Nadia Evangelou, principal economist and director of real estate research at NAR.
The strongest individual metropolitan market in the index is St. George, Utah. Evangelou pointed to a combination of factors driving that ranking. "It also has very strong population growth and in-migration, and its industrial demand is above average," she said. "So St. George, for example, is the No. 1, because one industry happened to have a good year, so there is a broader momentum over there."
The index also compares current conditions to 2022, when pandemic-era migration was at its peak. Raleigh, North Carolina, is the only major U.S. market that is stronger today than it was then. Formerly hot markets including Austin, Miami, and Naples, Florida, have all declined markedly since 2022.
Evangelou said smaller markets deserve attention from investors who typically focus on the largest cities. She pointed to Fayetteville, Arkansas, which is seeing broad-based growth, Huntsville, Alabama, which has one of the strongest multifamily scores in the nation, and Spartanburg, South Carolina. For the industrial sector specifically, Salem, Oregon, and Fairbanks, Alaska, rank highest.
