Commercial Real Estate (CRE) Market Index

The Atlanta Fed produces the Commercial Real Estate Market Index (CREMI), which provides information about general commercial real estate conditions in about 390 US cities and their adjacent communities. This high-level view of multiple asset types—office, hospitality, multifamily, and others—serves as a starting point that allows users to conduct a more detailed examination of associated trends. The Atlanta Fed updates CREMI quarterly in addition to producing articles discussing CREMI data and a diffusion index that shows the percent of CRE and economic factors that are showing positive momentum.

CREMI is a standardized index, and each CBSA and asset type combination has its own index based on its history. Zero represents the long-term index average of CRE performance in a given geography and asset type. Values above zero indicate from a risk perspective that a market is stronger than its long-term average based on the selected variables. Conversely, values below zero indicate a market that is weaker than its long-term average. Please see the “About CREMI” tab for more details.

CREMI Scores Over Time (CBSA view)

The chart below shows the median CREMI score across all CBSAs (black line) and the time series of scores for each by asset type. Filters can be used to toggle selections, including selecting all CBSAs in a given state. Some CBSAs have a shorter data history than others.

CREMI Scores Over Time (CBSA Multiselect)

The chart below allows users to select and compare multiple CBSA’s CREMI results by selected asset type. Additionally, users have the option to plot the median CREMI based on the selected CBSA’s. Use the CBSA highlight or hover over a line to identify a specific CBSA.

CREMI Scores Over Time (asset type view)

This chart displays CREMI scores for all asset types for a selected CBSA to facilitate comparative analysis across asset types.

CREMI Contributions Over Time

This chart shows contributions of commercial real estate and economic inputs to the CREMI. Contributions change over time, by CBSA, and by asset type.

CREMI Map

This chart shows the distribution of CREMI scores across CBSAs for relevant asset types at a point in time. CREMI covers about 390 metro areas and divisions.

CREMI Network Graph

This network graph allows users to identify the top three inputs that drive CREMI results, over the long-term or for the current quarter, for a given CBSA and asset type. Each grey node represents a single CBSA. Hovering over the node highlights the top three inputs to that CBSA’s CREMI score. Contributing inputs are identified by the larger colored nodes, identified in the legend. When a CBSA is highlighted, numbers appear in the input nodes that represent the weight of the input toward the CREMI score for that CBSA. The size of the input nodes indicates how many CBSAs connect to a given node. Multiple filters are available for further exploration.

CREMDI is a diffusion index which represents what percentage of CREMI input variables contribute positively to commercial real estate performance at a point in time. Each variable’s contribution is measured by quarter-over-quarter changes. A value of zero means all variables had a quarter-over-quarter change in a direction that negatively affected CRE, while a value of 100 indicates all variables changed in a direction that positively affected CRE. A value of 50 indicates an even split between positive and negative changes.

CREMDI Over Time (CBSA view)

The chart below shows CREMDI scores for CBSAs. Users can filter by CBSA and asset type.

CREMDI Over Time (state averages view)

This chart averages CREMDI scores (unweighted) for all CBSAs in a given state and by asset type.

What is CREMI?

The Federal Reserve Bank of Atlanta’s Commercial Real Estate Market Index (CREMI) provides a quarterly indication of commercial real estate market performance at the Core Based Statistical Areas (CBSA) geographic level and across various asset types.

How are CREMI results interpreted?

CREMI is standardized so that the long-term average of commercial real estate performance is centered at zero. Values above zero indicate a market that is stronger compared to its long-term average. This is a positive performance indicator for that CBSA. Conversely, values below zero indicate a market that is weaker compared to its long-term average. This is a negative performance indicator. The farther market trends are from zero, the stronger or weaker they are.

Specifically, CREMI represents the standard deviation (SD) of commercial real estate performance around the long-term average. Given this, one would expect 68 percent of values for a given geography and asset type to be distributed between +1 and -1 SD, 95 percent distributed between +2 and -2 SD, and 99 percent distributed between +3 and -3 SD. Extreme values can and do occur, particularly in times of economic stress (the 2008 Great Recession) or rapid economic recovery (the 2021 COVID-19 recovery).

To provide further clarity, five scenarios are described:

The index is above zero and increasing quarter over quarter: CRE market conditions for that CBSA and asset type are stronger than the long-term average and are getting stronger quarter over quarter.
The index is above zero and decreasing quarter over quarter: CRE market conditions for that CBSA and asset type remain stronger than the long-term average, but the market is less strong compared to the previous quarter.
The index is below zero and decreasing (getting more negative) quarter over quarter: CRE market conditions for that CBSA and asset type are weaker than the long-term average and are getting weaker quarter over quarter.
The index is below zero and increasing (getting less negative) quarter over quarter: CRE market conditions for that CBSA and asset type remain weaker than the long-term average, but the market is less weak compared to the previous quarter.
If the index signs change quarter over quarter, this indicates an inflection point for CRE market conditions for that CBSA and property type (stronger to weaker or vice versa, compared to the long-term average).

Note: Holistic CRE market analysis is nuanced and requires context and information from various sources, some of which may not be easily quantified or captured in CREMI. Meaningful trends observed in CREMI are meant to prompt users to look into specific markets in detail rather than draw wide-ranging conclusions about that market.

How is CREMI calculated?

CREMI is derived from multiple commercial real estate asset type performance data and local-level economic data through use of a dynamic factor model (DFM). As part of data setup, each variable’s sign is adjusted so that the level or change of variables that contribute positively to commercial real estate performance receive a positive sign and variables where the level or change contributes negatively receive a negative sign. Once the variables’ signs are adjusted, they are standardized (mean = 0, standard deviation = 1) and the first principal component is calculated. The R package "DFMs" and "Factoextra" are used for the CREMI model.

What is the CREMDI?

To provide additional information on trends in commercial real estate performance, the Commercial Real Estate Market Diffusion Index (CREMDI) represents the percent of variables where the quarter-to-quarter change is generally considered a positive for performance. Ranging from 0 to 100 percent, a value of 0 means all variables had a quarter-to-quarter change in a direction that negatively affects commercial real estate, while a value of 100 indicates all variables changed in a direction that positively affects commercial real estate. A value of 50 percent indicates an even split between positive and negative changes.

To help identify potentially longer-term trends in the data and reduce quarter-to-quarter volatility, a smoothed version of the CREMDI is also provided. This is simply the diffusion index with a locally estimated scatterplot smoothing (LOESS) regression applied.

Who can I contact if I have questions related to CREMI?

Please submit any questions to cremi.support@atl.frb.org

What variables are used in the CREMI calculation?

The commercial real estate and economic measures used are all related to specific CBSAs and are obtained through public and nonpublic data sources. All variables were chosen based on their importance in reflecting commercial real estate market performance, reporting frequency, and on their availability across all CBSAs. Specifically, variables with type “CRE” in the table below are sourced from CoStar Group, and the data provider does not allow the Federal Reserve Bank of Atlanta to share them externally.

Asset Type: Office
Variable Name	Type	Transformation	Sign
Occupancy Rate	CRE	Level	+
Net Operating Income Index	CRE	Log Change (YoY)	+
Market Cap Rate	CRE	Level	-
Asset Value	CRE	Percent Change (YoY)	+
Net Absorption	CRE	Level	+
Unemployment Rate	Economic	Level	-
Office Employment	Economic	Percent Change (YoY)	+
Industrial Production	Economic	Percent Change (YoY)	+
CPI	Economic	Percent Change (YoY)	-

Asset Type: Multifamily
Variable Name	Type	Transformation	Sign
Occupancy Rate	CRE	Level	+
Net Operating Income Index	CRE	Log Change (YoY)	+
Market Cap Rate	CRE	Level	-
Asset Value	CRE	Percent Change (YoY)	+
Absorption Units	CRE	Levels	+
Unemployment Rate	Economic	Level	-
Households	Economic	Percent Change (YoY)	+
Industrial Production	Economic	Percent Change (YoY)	+
CPI	Economic	Percent Change (YoY)	-

Asset Type: Retail
Variable Name	Type	Transformation	Sign
Occupancy Rate	CRE	Level	+
Net Operating Income Index	CRE	Log Change (YoY)	+
Market Cap Rate	CRE	Level	-
Asset Value	CRE	Percent Change (YoY)	+
Net Absorption	CRE	Level	+
Unemployment Rate	Economic	Level	-
Retail Employment	Economic	Percent Change (YoY)	+
Industrial Production	Economic	Percent Change (YoY)	+
CPI	Economic	Percent Change (YoY)	-

Asset Type: Industrial
Variable Name	Type	Transformation	Sign
Occupancy Rate	CRE	Level	+
Net Operating Income Index	CRE	Log Change (YoY)	+
Market Cap Rate	CRE	Level	-
Asset Value	CRE	Percent Change (YoY)	+
Demand	CRE	Percent Change (YoY)	+
Unemployment Rate	Economic	Level	-
Industrial Employment	Economic	Percent Change (YoY)	+
Industrial Production	Economic	Percent Change (YoY)	+
CPI	Economic	Percent Change (YoY)	-

Asset Type: Hospitality
Variable Name	Type	Transformation	Sign
Occupancy Rate	CRE	Level	+
Average Daily Rate (ADR)	CRE	Log Change (YoY)	+
Market Cap Rate	CRE	Level	-
Asset Value	CRE	Percent Change (YoY)	+
Unemployment Rate	Economic	Level	-
Hospitality Employment	Economic	Percent Change (YoY)	+
Industrial Production	Economic	Percent Change (YoY)	+
CPI	Economic	Percent Change (YoY)	-

CREMI Data (.csv) This file contains the CREMI score and variable contributions to the CREMI score for each CBSA and asset type over time. Variable contributions summed up result in the CREMI score. Technically, each variable’s contribution equals that variable’s coefficient times the variable’s standardized value.

CREMDI Data (.csv) This file contains CREMDI scores (raw as well as smoothed) for each CBSA and asset type over time.

LongWeights Data (.csv) This file contains the long-term CREMI weights as of the most recent quarter for each CBSA and asset type. Weights represent importance (in percentage) of the variables to the CREMI score. Technically, weight equals the square of the variable’s coefficient as a percent of the total squared coefficients for all variables.