Commercial Leading Jumps in Second Quarter 2023

Sep 06, 2023

Posted by
Ryan McLaughlin


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The BCREA Commercial Leading Indicator (CLI) rose 0.6 points to 147 in the second quarter of 2023, while the six-month moving average fell to 147. Compared to the same quarter in 2022, the index was down by 4.7 per cent.

It is important to note that the environment for commercial real estate remains highly abnormal and uncertain. The CLI is designed to interpret economic and office employment growth as positive indicators for commercial real estate demand. The recent strong growth in these indicators may not translate as readily into improved commercial real estate market conditions due to structural changes in the economy caused by the COVID-19 pandemic.

The CLI rose slightly in the employment and financial categories while declining in the economic category. An increase in real retail sales was offset by a decline in manufacturing sales. Meanwhile, a drop in inflation-adjusted wholesale trade pulled the economic component into negative territory. Spreads between corporate and government borrowing costs declined slightly in the second quarter, offsetting the impact of a slight weakening in prices of Real Estate Investment Trusts (REIT). This resulted in a net positive contribution from the financial component of the index. Finally, a rise in office employment (finance, insurance, and real estate) more than counteracted a drop in manufacturing employment, causing a net increase in the index’s employment component.

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Send questions and comments about Commercial Leading Indicator to:

Ryan McLaughlin
Chief Economist
[email protected]

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