The National Association of Realtors released a new index. It measures future demand for commercial real estate. Uses local economic factors. Whatever that means.
Here's what happened. Some realtors sat in a conference room and decided the problem with commercial real estate was insufficient data. Not the remote work explosion. Not the fact that office buildings sit empty like monuments to 2019. Not the leverage ratios that would make a subprime lender blush. No. What the market needed was another f*cking index.
They call it a demand indicator. It indicates future demand by looking at factors in local economies. Factors. Local. Economies. Three words that have never helped a retail trader make a profitable decision. But sure. This time will be different.
The index tells you where commercial real estate demand is highest. Know what else tells you that? Vacancy rates. Lease prices. Foot traffic. Things that exist right now. But those are backwards-looking metrics. This index looks forward. Into the future. Where all the money is.
Retail traders will see this index. They'll study the methodology. They'll compare metro areas. They'll build spreadsheets. They'll leverage their portfolios into commercial REITs in the highest-demand markets. Then they'll watch those REITs drop fifteen percent because some analyst downgraded the sector based on a metric this index doesn't measure.
The beautiful part is the Realtors built this index using factors. Not one factor. Factors. Plural. Multiple inputs feeding into a single output that tells you where demand will be highest. Like a crystal ball made of Excel formulas and wishful thinking.
The index exists now. It has data. It will be cited in presentations. Realtors will reference it when explaining why you should buy that strip mall in Tucson. And somewhere a retail trader is already planning his retirement around it.
Photo by Breno Assis on Unsplash
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