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 region and asset type. Values above zero indicate that the market based on the selected variables is stronger than the long-term average from a risk perspective. Conversely, values below zero indicate that the market is weaker than the long-term average. See the “About CREMI” tab for more information.
CREMI Score Trends (CBSA Perspective)
The graph below shows the median CREMI score for all CBSAs (black line) and a time series of each score by asset type. You can use the filter to toggle the selection to select all CBSAs in a particular province. Some CBSAs have a shorter data history than others.
CREMI Map
This graph shows the distribution of CREMI scores for relevant property types in the CBSA at a point in time. CREMI covers approximately 390 metropolitan areas and districts.
CREMI Score Trends (by Asset Type)
This chart displays the CREMI scores for all asset types for the selected CBSA, facilitating comparative analysis between asset types.
CREMI contribution over time
This chart shows the contributions of commercial real estate and economic inputs to CREMI. Contributions vary over time, by CBSA, and by property type.
CREMI network graph
This network graph allows you to identify the top three inputs that impact CREMI results over time or in the current quarter for a particular CBSA and asset type. Each grey node represents one CBSA. Hovering over a node highlights the top three inputs to that CBSA's CREMI score. Contributing inputs are identified by large colored nodes as indicated in the legend. When a CBSA is highlighted, the input nodes display numbers that represent the weight of the input to that CBSA's CREMI score. The size of the input node indicates how many CBSAs are connected to a particular node. Multiple filters are available for further investigation.
CREMDI is a diffusion index that represents what percentage of CREMI input variables at a given point in time positively impact commercial real estate performance. The contribution of each variable is measured by its quarterly change. A value of 0 means that all variables changed quarterly in a direction that negatively impacts CRE, a value of 100 indicates that all variables changed quarterly in a direction that positively impacts CRE, and a value of 50 indicates an even split between positive and negative changes.
CREMDI Progress (CBSA Perspective)
The graph below shows the CREMDI scores for CBSAs. Users can filter by CBSA and asset type.
CREMDI Trends (State Average View)
This graph shows the average CREMDI scores (unweighted) for all CBSAs by specific province and property type.
What is CREMI?
The Federal Reserve Bank of Atlanta's Commercial Real Estate Market Index (CREMI) provides a quarterly view of commercial real estate market performance at the Core Based Statistical Area (CBSA) geographic level and across asset types.
How are CREMI results interpreted?
The CREMI is standardized so that the long-term average of commercial real estate performance is centered around zero. Values above zero indicate a strong market compared to the long-term average. This is a positive performance indicator for that CBSA. Conversely, values below zero indicate a weak market compared to the long-term average. This is a negative performance indicator. The further away from zero the market trend is, the stronger or weaker it is.
Specifically, CREMI represents the standard deviation (SD) of commercial real estate performance relative to the long-term average. With this in mind, 68% of values for a given region and asset type are expected to be distributed between +1 and -1 SD, 95% between +2 and -2 SD, and 99% between +3 and -3 SD. Extreme values can occur, especially during times of economic stress (the Great Recession of 2008) or rapid economic recovery (the recovery from COVID-19 in 2021).
To provide further clarity, we will discuss five scenarios:
If the index is above zero and increasing quarterly: CRE market conditions for that CBSA and asset type are stronger than the long-term average and are getting stronger quarter by quarter. If the index is above zero and decreasing quarter by quarter: CRE market conditions for that CBSA and asset type remain stronger than the long-term average, but the market is weakening compared to the previous quarter. If the index is below zero and decreasing (more negative) quarter by quarter: CRE market conditions for that CBSA and asset type are weaker than the long-term average and are getting weaker quarter by quarter. If the index is below zero and increasing (less negative) quarter by quarter: CRE market conditions for that CBSA and asset type remain weaker than the long-term average, but the market is getting weaker compared to the previous quarter. If the sign of the index changes quarter by quarter, this indicates an inflection point (from stronger to weaker compared to the long-term average, or vice versa) in CRE market conditions for that CBSA and property type.
Note: A comprehensive CRE market analysis is nuanced and requires context and information from a variety of sources, some of which may not be easily quantified or captured in CREMI. Meaningful trends observed in CREMI are intended to inspire users to research a particular market in more detail, rather than drawing broad conclusions about that market.
How is CREMI calculated?
CREMI is generated from performance data for multiple commercial real estate asset types and regional level economic data using dynamic factor models (DFMs). As part of the data set, the sign of each variable is adjusted so that the level or change of a variable that contributes positively to commercial real estate performance is given a positive sign and variables that contribute negatively are given a negative sign. Once the signs of the variables are adjusted, they are standardized (mean = 0, standard deviation = 1) and the first principal component is calculated. The R packages “DFMs” and “Factoextra” are used for the CREMI model.
What is CREMDI?
Providing additional information about trends in commercial real estate performance, the Commercial Real Estate Market Diffusion Index (CREMDI) represents the percentage of variables whose quarterly changes are generally considered positive for performance. Ranging from 0 to 100 percent, a value of 0 means that all variables changed quarterly in a direction that negatively impacted commercial real estate, a value of 100 indicates that all variables changed quarterly in a direction that positively impacted commercial real estate, and a value of 50 percent indicates an equal amount of positive and negative changes.
To identify long-term trends in the data and reduce quarterly fluctuations, a smoothed version of CREMDI is also provided, which is simply the application of Locally Estimated Scatterplot Smoothing (LOESS) regression to the diffusion index.
Who should I contact if I have questions about CREMI?
If you have any questions, please send them to cremi.support@atl.frb.org.
What variables are used in the CREMI calculation?
All commercial real estate and economic indicators used are relevant to a specific CBSA and are obtained from public and private data sources. All variables were selected based on their importance to reflecting commercial real estate market performance, reporting frequency, and availability across all CBSAs. Specifically, variables with type “CRE” in the table below are obtained from CoStar Group and the data provider has not authorized the Federal Reserve Bank of Atlanta to be shared externally.
Asset Type: Office Variable Name Type Transformation Sign Occupancy CRE Level + Net Operating Income Index CRE Log Change (YoY) + Market Capitalization Ratio 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 CRE Level + Net Operating Income Index CRE Log Change (YoY) + Market Capitalization Ratio CRE Level – Asset Value CRE Percent Change (YoY) + Absorption Units CRE Level + Unemployment Rate Economic Level – Household Economic Percent Change (YoY) + Industrial Production Economic Percent Change (YoY) + CPI Economic Percent Change (YoY) – Asset Type: Retail Variable Name TypeTransformation Sign Occupancy CRE Level + Net Operating Margin Index CRE Log Change (YoY) + Market Capitalization 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 CRE Level + Net Operating Margin Index CRE Log Change (YoY) + Market Capitalization 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 CRE Level + Average Daily Rate (ADR) CRE Log Change (YoY) + Market Cap CRE Level – Asset Value CRE Percent Change (YoY) + Unemployment Rate Economy Level – Hospitality Employment Economy Change (YoY) + Industrial Production Economy Change (YoY) + CPI Economy Change (YoY) –
CREMI Data (.csv) This file contains the CREMI scores for each CBSA and asset type and the variable contributions to the CREMI score over time. The variable contributions sum to the CREMI score. Technically, the contribution of each variable is equal to the coefficient for that variable multiplied by the standardized value of the variable.
CREMDI Data (.csv) This file contains the CREMDI scores (raw and smoothed) for each CBSA and asset type over time.
LongWeights Data (.csv) This file contains the long-term CREMI weights for the most recent quarter for each CBSA and asset type. The weight represents the importance (percentage) of the variable to the CREMI score. Technically, the weight is equal to the squared coefficient of the variable as a percentage of the total squared coefficient of all variables.