Where commercial real estate demand is the highest, according to new data

The National Association of Realtors (NAR) ranks South Carolina highest for future commercial real estate demand, citing an index built from Bureau of Labor Statistics and Census data across 300+ metro areas and four sectors (office, industrial, retail, multifamily). The strongest market is St. George, Utah, led by above-average industrial demand, office employment growth, and population in-migration, while Raleigh, NC is the only major market stronger than the 2022 migration peak. Formerly hot markets like Austin, Miami, and Naples have declined markedly since 2022, suggesting the demand momentum has shifted toward the Sunbelt and smaller/mid-sized metros such as Fayetteville, AR; Huntsville, AL; and Spartanburg, SC.

Analysis

This is better read as a relative-value map than a broad macro signal. The public-market winners are REITs and developers with exposure to faster-growing interior and Sunbelt submarkets where supply is harder to overbuild and tenant demand is more durable; the losers are coastal office and legacy gateway landlords that need a cyclical leasing recovery just to stabilize cash flow. Second-order, the real advantage may accrue first to lenders, JV equity, and land sellers in these growth corridors, because capital will underwrite those markets more easily before REIT multiples fully reflect the better demand mix.

Near term, the tradable catalyst is not the ranking itself but how it bleeds into leasing spreads, occupancy, and 2025 guidance. Over 1-3 months, apartment and industrial names with meaningful exposure to migration-positive metros should see less downside revision risk than office-heavy peers; over 6-18 months, a lower-rate environment would amplify the gap as cheaper capital lets stronger-growth markets convert demand into new supply and rent roll growth. The key risk is that financing remains the binding constraint: if cap rates stay high and transaction volumes stay frozen, strong demand data will not translate into valuation upside.

The consensus is probably still too anchored to the 2021-2022 migration winners and too dismissive of smaller markets where competition for assets is thinner. That said, the index is a slow-moving composite of labor and migration, so it is not a clean timing tool; the edge is in positioning for relative outperformance, not betting on an immediate sector rerating. The thesis is falsified if employment growth in the highlighted markets rolls over or if coastal office leasing suddenly turns positive enough to narrow the operating gap.

Key Decisions for Investors

• Long MAA / short EQR for 3-6 months: cleaner expression of Sunbelt apartment demand vs coastal market exposure. Target 8-12% relative outperformance; reduce if same-store NOI or renewal spreads in the Sunbelt stop leading.
• Long PLD on pullbacks for a 6-18 month horizon: industrial demand in faster-growing metros should support occupancy and pricing power, and PLD has the scale to capture incremental warehouse demand. Falsify if industrial employment or goods movement data weakens materially.
• Short BXP or SLG as a hedge against the weaker coastal office complex: this is a cash-flow and refinancing trade, not a demand momentum trade. Best entered into any broad REIT rally; risk is a surprise leasing recovery or faster-than-expected office recapitalizations.
• Watchlist, not a trade yet: KRG or KIM for Sunbelt retail exposure. Add only if consumer and leisure/hospitality employment in the growth markets keeps accelerating, because otherwise the demand signal is too soft to overcome rate-driven cap rate pressure.