The core measurement problem in commercial real estate is timing. Vacancy rates and net absorption confirm what a market has already done. The National Association of Realtors has released an index that works differently, using factors within local economies to indicate where demand is heading rather than where it has settled.
The mechanism behind a forward-looking demand index rests on the relationship between a local economy and the commercial space it eventually absorbs. Local economic conditions tend to lead lease activity; formalizing that relationship into a ranked score gives brokers and investors something to work from before the vacancy data has moved.
The index identifies which markets currently show the highest demand, using local economic inputs to make those rankings comparable across geographies. That is the claim the National Association of Realtors is making. Whether local economic factors reliably predict commercial absorption is a track record the index still has to build.