Commercial real estate economic indicators – top indicators by major asset type

Universal commercial real estate economic indicators

Inflation (CPI, PCE, PPI)

Inflation measures the change in cost or price of a given set of goods or services. Inflation is reported on in multiple different ways, though the Consumer Price Index (CPI), Personal Consumption Expenditures (PCE), and Producer Price Index (PPI) are three key methods and releases.

Consumer Price Index

CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. (Source: U.S. Bureau of Labor Statistics)

Personal Consumption Expenditures

PCE a measure of consumer spending on goods and services among households in the U.S. The PCE is used as a mechanism to gauge how much earned income of households is being spent on current consumption for various goods and services. (Source: U.S. Bureau of Labor Statistics)

Producer Price Index

PPI measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. (Source: U.S. Bureau of Labor Statistics)

Why this economic indicator is important to the CRE market

Inflation affects the cash flows, including revenues and expenses, of a property. Therefore, it can impact the profit margin of a specific investment, which in turn can affect the expected returns for an investor. The extent of inflation's impact on a commercial real estate investment or portfolio largely depends on the lease structure of the property or portfolio, as well as the manager/owner's ability to control expenses.

Interest rates

There are several types of interest rates that are useful to monitor as a CRE investor.

Federal Funds Rate

The Federal Funds Rate is the rate at which U.S. depository institutions (i.e., banks) can borrow from other U.S. depository institutions.

10-year Treasury Yield

10-year Treasury Yield is the current rate the US Government would pay to a purchaser of a 10-year US Treasury note today. The 10-year note is a debt obligation by the US government that matures in 10 years and yields a fixed-rate interest payment twice yearly till maturity.

Why this economic indicator is important to the CRE market

Interest rates have an impact on the cost of financing across the economy, including commercial real estate investments. When interest rates are high, the cost of borrowing money increases. This makes financing a transaction or existing investment with a mortgage more expensive for the borrower. As a result, higher interest rates often make transactions and refinancing less feasible and can lead to lower property valuations.

Stock market

S&P 500®

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization. (Source: S&P Global)

Why this economic indicator is important to the CRE market

The stock market can be a helpful gauge of investor sentiment and an early indicator of economic conditions. While the makeup of different indices may differ, keeping an eye on the overall stock market can provide valuable insights for a participant in the commercial real estate market about general capital market conditions and cross-sector valuation trends.

Industrial real estate economic indicators

Manufacturing output

US Manufacturing Purchasing Managers’ Index

There are several sources for monitoring US manufacturing output, however, one of the most frequently updated sources is the S&P Global US Manufacturing Purchasing Managers’ Index (PMI). The PMI surveys purchasing managers across multiple industries to provide a multi-indicator representation of US manufacturing activity.

Why this economic indicator is important to the industrial real estate market

Manufacturing activity has a direct impact on the demand for industrial real estate. High or rising Manufacturing PMI levels typically indicate increased or increasing production and warehousing activity, leading to greater demand for industrial space. Conversely, low or falling PMI levels generally indicate lower or declining levels of activity and decreased demand for industrial space.

E-commerce sales

Quarterly Retail E-Commerce Sales

The Quarterly Retail E-Commerce Sales report estimates preliminary and final US retail sales based on the Monthly Retail Trade Survey. This randomly sampled survey selects ~10,800 retail firms and asks them a spectrum of questions, including whether their business uses e-commerce as a distribution model and their monthly retail e-commerce sales estimates. (Source: US Census Bureau)

Why this economic indicator is important to the industrial real estate market

The Quarterly Retail E-Commerce Sales report provides insights into the growth of online retail. This growth impacts the demand for industrial real estate, particularly distribution and fulfillment centers. An increase (decrease) in e-commerce sales leads to a higher (lower) demand for warehouse space.

National freight shipments

Cass Freight Index

The Cass Freight Index® is a monthly measure of intra-continental freight shipments in the US broken out by freight modes and aggregates data across a broad sampling of industries. (Source: Cass Information Systems, Inc.)

Why this economic indicator is important to the industrial real estate market

The Cass Freight Index tracks the volume and activity of freight shipments in the US. An increase in freight volumes indicates growing demand for warehouse and distribution space, while a decrease indicates declining demand. Monitoring this indicator can help CRE professionals anticipate potential changes in demand for various types of industrial space.

Retail real estate economic indicators

Retail and advanced retail sales

Advance Monthly Retail Trade Survey

Produced by the US Census Bureau, the Advance Monthly Retail Trade Survey (MARTS) provides an early indication of sales of retail and food service companies by surveying 4,800 retail and food services companies (a stratified subsample of the Monthly Retail Trade Survey). Retail sales are one of the primary measures of consumer demand for both durable and non-durable goods. MARTS also provides an estimate of monthly sales at food service establishments and drinking places. (Source: US Census Bureau)

Monthly Retail Trade Survey

Like MARTS, the Monthly Retail Trade Survey (MRTS) provides current estimates of sales at retail and food services stores and inventories held by retail stores. It surveys approximately 13,000 retail businesses, and sales and inventory estimates are released approximately 6 weeks after the end of each monthly collection period. (Source: US Census Bureau)

Why this economic indicator is important to the retail real estate market

The retail trade survey data offers insights into retail sales trends, which can help to inform a commercial real estate professional of the demand for retail real estate.

Retailer benchmarks

ICSC Monthly Retail Industry Benchmark Report

Each month, the International Council of Shopping Centers updates the Industry Benchmark Report, a series of data points from both public and private sources that shed light on the state of retailers and retail real estate. In addition to containing headline figures from the MARTS and MRTS surveys, the report tracks several indicators of retail industry health, such as retailer openings, closings, and bankruptcies. Data is gathered from other trade organizations such as the National Council of Real Estate Investment Fiduciaries (NCREIF) in addition to the Retail Real Estate Market Research Team at PNC. (Source: International Council of Shopping Centers)

Why this economic indicator is important to the retail real estate market

The Industry Benchmark Report offers valuable tenant demand indicators for retail real estate. In addition to sales figures, the data in the report can provide insights into how consumer spending trends impact bankruptcies, closures, and openings of retail locations across various industries.

E-commerce penetration

Quarterly Retail E-Commerce Sales

As mentioned in the top economic indicators for industrial real estate, the Quarterly Retail E-Commerce Sales report is one of the best sources for US e-commerce data. This randomly sampled survey of ~10,800 retail firms includes questions that identify what percentage of retail firms are currently engaged in an e-commerce distribution model, and to what extent vs. other sales distribution models. (Source: US Census Bureau)

Why this economic indicator is important to the retail real estate market

The Quarterly Retail E-Commerce Sales report reveals trends in online versus in-store sales, helping you understand shifting consumer behavior. This insight guides investment decisions, such as favoring mixed-use properties or experiential retail spaces. The report also informs about tenant viability; retailers thriving online make more reliable tenants.

Multifamily real estate economic indicators

Median sales price of existing homes

Existing-Home Sales

The National Association of Realtors® calculates monthly US Existing-home sales statistics by collecting and analyzing a sample of home sales data from 210 MLSs nationwide. The statistics break down the home sales data by four major geographical regions and across different types of homes. (Source: National Association of Realtors)

Why this economic indicator is important to the multifamily real estate market

The statistics on US Existing-Home Sales from the National Association of Realtors® provide valuable insights into residential market trends. Though the data mainly focuses on single-family homes, it is still useful for multifamily commercial real estate professionals because single-family homes serve as an alternative to multifamily properties. By keeping track of single-family market trends, professionals can gain valuable information that can help in assessing demand and pricing (rents, valuations) in the multifamily market.

Apartment vacancy rate

Housing Vacancies and Homeownership survey

The Housing Vacancies and Homeownership survey, conducted by the US Census Bureau, is a quarterly survey providing current information on rental and homeowner vacancy rates. 72,000 housing units make up the monthly sample. (Source: US Census Bureau)

Why this economic indicator is important to the multifamily real estate market

The Housing Vacancies and Homeownership survey by the US Census Bureau offers important data on housing vacancy rates and trends in homeownership for both single-family and multifamily real estate markets. Low vacancy rates for multifamily properties can be indicative of limited supply or high demand for rental units, and can be useful when understanding multifamily rental growth.

Permits, starts, completions

New Residential Construction report

Created by the US Census Bureau, the New Residential Construction report is a monthly data release of all building permits, construction starts, and construction completions for all US housing units both regionally and nationally. (US Census Bureau)

Why this economic indicator is important to the multifamily real estate market

The New Residential Construction report by the US Census Bureau provides insights into trends in multifamily housing starts, completions, and permits. This data offers a glimpse into the supply pipeline for the housing market. Understanding these supply-side dynamics can help inform estimations of rental rates, occupancy levels, and property values.

Office real estate economic indicators

Employment by industry

Employment By Industry

Part of a larger monthly data release called “The Employment Situation”, the Employment By Industry data is also calculated each month by the US Bureau of Labor and Statistics. It provides a breakdown of changes in employment monthly by major industry. (Source: US Census Bureau)

Why this economic indicator is important to the office real estate market

The US Census Bureau's Employment by Industry data release provides information on job creation and sector-specific employment trends. This dataset is useful for analyzing the demand for office real estate. Even though not all industries occupy office spaces, understanding employment trends across different sectors can help in assessing the overall demand for office space.

Jobless claims and U-6 unemployment

Unemployment Insurance Weekly Claims

Released every Thursday by the US Department of Labor, the Unemployment Insurance Weekly Claims includes data on initial claims and continued weeks claims for unemployment insurance with breakdowns by US state. (Source: US Department of Labor)

U-6 Unemployment Rate

The U-6 Unemployment Rate data is released monthly as part of the “The Employment Situation Summary” by the US Bureau of Labor and Statistics. This rate includes unemployed individuals actively seeking new jobs, individuals working part-time due to economic reasons, and individuals who are neither working nor actively seeking, however, have expressed within the last 12 months that they are available to work. (Source: Bureau of Labor and Statistics)

Why this economic indicator is important to the office real estate market

Like employment data, unemployment data is important for office real estate professionals to understand the overall employment situation and trends across the labor market. This information can help them assess the demand for office space. The official unemployment rate shows the percentage of the labor force that is not employed and actively looking for work. The U-6 Unemployment Rate is more comprehensive, as it includes not only those looking for work, but also discouraged workers (who have given up looking for work) and those who are underemployed (working part-time for economic reasons).

Small business optimism

National Federation of Independent Businesses (NFIB) Small Business Optimism Index

As the title of this index suggests, the NFIB Small Business Optimism Index measures US small business owners’ perceptions of market conditions and sentiment. A random sample of 10,000 NFIB members are surveyed monthly for the index. (Source: NFIB)

Why this economic indicator is important to the office real estate market

The NFIB Small Business Optimism Index offers insights into the attitudes and expectations of small business owners. It covers a range of topics such as current operating conditions, spending and growth plans, and future expectations. The survey focuses on small businesses, typically with fewer than 500 employees, which collectively represent almost half of the labor market and make significant contributions to the overall economy.

A starting place for commercial real estate economic indicators

While this is not a definitive list of economic indicators, it is a starting place for anyone wanting to incorporate more economic indicators into their investment decision-making process. We encourage you to bookmark this resource page as we’ll create supporting articles that take a deeper dive into how you can apply each economic indicator for the commercial real estate market.

Have a question about this list or have a favourite commercial real estate economic indicator that isn’t on this page that you’d like to share? Send us an email at altusresearch@altusgroup.com