What Three Indicators Say About Where the U.S. Commercial Real Estate Market Ended 2024

Two of the three leading indicators for U.S. commercial real estate ended 2024 on an upbeat note, particularly on the lending and construction phase.

The commercial real estate lending market saw significant growth in Q4, as capital reallocation and improving fundamentals fueled a spike in loan originations, according to CBRE. The firm’s
Lending Momentum Index closed the quarter at 259, rising 37 percent year over year for Q4 and 21 percent for Q3, far exceeding the pre-pandemic five-year average of 229. According to James Millon, U.S. President of Debt and Structured Finance at CBRE, lenders should remain active in 2025 as maturing debt fuels refinancing and investment sales.

CBRE

The Dodge Momentum Index (DMI), issued by Dodge Construction Network, grew 10.2 percent in December to 212.0 (2000=100) from the revised November reading of 192.3. Over the month, commercial planning increased 14.2 percent while institutional planning improved 2.5 percent. The DMI continued to show strength into January, rising another 6 percent.

“Commercial activity rebounded strongly in December, thanks to a re-acceleration in data center and warehouse planning activity,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “Overall, the strong performance of the Momentum Index this past year is expected to support nonresidential construction spending throughout 2025.”

The one negative indicator came from the AIA/Deltek Architecture Billings Index (ABI) score fell to 44.1 for December 2024 as the share of firms reporting a decline in firm billings increased. Firm billings have now decreased for the majority of firms every month except two since October 2022. While not a full-fledged recession, this two-year period of softness and uncertainty has been challenging for many firms.