Business Creation

Index

March 2017

National Association of REALTORS® Research Department

Introduction

The Business Creation Index (BCI) was created to monitor local economic

conditions from the perspective of NAR’s commercial members. The quarterly

report offers insight from commercial real estate professionals into whether

businesses are opening or closing by industry, population density, and subregion.

On a monthly basis, it tracks three key questions related to local market

conditions:

1. An increase of businesses opening in local communities in the last 30 days

2. An increase of businesses closing in local communities in the last 30 days

3. Net businesses opening and closing in local communities in the last 30 days

On the 2016 Profile of Commercial Members, NAR’s membership was asked the

above questions over the last year from July 2015 to June 2016. The results gave

way to creating the survey to gather monthly data and report changes on a

quarterly basis.

Additional topics will be examined in depth on

http://economistsoutlook.blogs.realtor.org/.

The next BCI survey releases for 2017 will be:

June 2017

September 2017

December 2017

2017 Business Creation Index

New Businesses Opening in

Communities

NAR’s commercial members were asked whether new businesses were opening

in their communities in the previous 30 days for January through March 2017.

Fifty-eight percent of respondents said they had seen an increase in

businesses opening in March 2017. Compared to November 2016, only

43 percent said they has seen an increase in businesses openings, the

lowest reported since the survey was launched in August 2016.

Thirty-four percent of respondents said they had not seen an increase in

businesses opening in March 2017, the lowest reported since the inception

of the survey.

2017 Business Creation Index

49% 50% 44% 43% 49% 48%55% 58%

43% 42% 48% 49% 43% 43%36% 34%

8% 8% 8% 8% 9% 10% 9% 9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

August September October November December January February March

An increase of businesses openings in community

in the last 30 days

(August 2016 through March 2017)

Yes No Don't Know

Businesses Opening

By Industry

NAR’s commercial members were asked the types of industries they saw

opening in their communities each month between January through

March 2017.

2017 Business Creation Index

5%

7%

14%

19%

20%

23%

35%

38%

55%

59%

% 10% 20% 30% 40% 50% 60% 70%

Transportation

Education/ Training

Technology

Services

Hospitality

Office

Real Estate

Health/ Medical/ Dental

Food/ Beverage

Retail

Industries Opening for January-March 2017

Businesses Opening

By Subregion

Sixty-three percent of members in the East South Central subregion saw

businesses opening in the last three months, followed by Middle Atlantic (57

percent), South Atlantic and West North Central (56 percent), and West

South Central (52 percent).

2017 Business Creation Index

43%

43%

50%

52%

52%

56%

56%

57%

63%

0% 10% 20% 30% 40% 50% 60% 70%

East North Central

Pacific

Mountain

New England

West South Central

West North Central

South Atlantic

Middle Atlantic

East South Central

Businesses Opening by Subregion

for January-March 2017

Businesses Closing in

Communities

NAR’s commercial members were asked whether businesses were closing in

their communities in the previous 30 days for January through March 2017.

Sixty-five percent of respondents said they had not seen an increase in

businesses closing in March 2017, which is a decrease from 73 percent

reported in December 2016.

Twenty-four percent of respondents said they had seen an increase in

businesses closing in March 2017, the highest since the survey’s inception

in August 2016 at 25 percent.

2017 Business Creation Index

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

25% 22% 21% 20% 17%23% 22% 24%

64% 67% 69% 69% 73% 66% 67% 65%

11% 11% 11% 11% 10% 11% 11% 11%

An increase of businesses closing in

community in the last 30 days

(August 2016 through March 2017)

Yes No Don't Know

Businesses Closing

By Industry

NAR’s commercial members were asked the types of industries they saw

closing in their communities each month between January through March

2017.

2017 Business Creation Index

1%

2%

2%

3%

5%

5%

8%

8%

21%

30%

% 5% 10% 15% 20% 25% 30% 35%

Transportation

Education/ Training

Technology

Hospitality

Health/ Medical/ Dental

Services

Real Estate

Office

Food/ Beverage

Retail

Industry Closings for January-March 2017

Businesses Closing

By Subregion

Twenty-nine percent of members in the Mountain subregion saw

businesses closing in the last three months, followed by Middle Atlantic,

East North Central, and New England (25 percent).

16%

19%

21%

22%

22%

25%

25%

25%

29%

0% 5% 10% 15% 20% 25% 30% 35%

West South Central

East South Central

South Atlantic

West North Central

Pacific

New England

East North Central

Middle Atlantic

Mountain

Businesses Closing by Subregion

for January-March 2017

2017 Business Creation Index

Net Change in Openings

to Closings

NAR’s commercial members were asked to compare businesses opening to

closing in their communities in the previous 30 days for January through

March 2017.

Fifty-two percent of respondents said they had seen more businesses

opening than closing in March 2017, a decrease from 55 percent the

previous month in February 2017 but an overall increase from 2016.

Twenty-nine percent of respondents said they had seen the ratio of

businesses opening to closing had stayed the same in March 2017, an

increase from 26 percent the previous month in February 2017.

2017 Business Creation Index

50% 52% 49% 49% 53% 52% 55% 52%

16% 14%13% 14% 12% 12%

11% 13%

25% 26% 30% 30% 28% 29% 26% 29%

10% 8% 8% 7% 8% 8% 8% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Net Openings and Closings

for August 2016 through March 2017

Don't Know

Opening and closings have remained the same in the last year

More businesses closing than opening

More businesses opening than closing

Methodology

The survey was conducted by the National Association of REALTORS® Research

Department. Each month, August through December 2016, a sample of NAR’s

commercial members were surveyed via email sampling.

Each month roughly 1,000 commercial members responded to the survey. The data

compiled for this report and was based on a total of 3,140 completed surveys.

Subregions are defined as follows:

New England

◦ – Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut

Middle Atlantic

◦ – New York, Pennsylvania, and New Jersey

East North Central

◦ – Wisconsin, Illinois, Indiana, Michigan, and Ohio

West North Central

◦ – North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, and Missouri

South Atlantic

◦ – Delaware, Maryland, Washington D.C., West Virginia, Virginia, North Carolina,

South Carolina, Georgia, and Florida

East South Central

◦ – Kentucky, Tennessee, Mississippi, and Alabama

West South Central

◦ – Texas, Oklahoma, Arkansas, and Louisiana

Mountain

◦ – Montana, Idaho, Nevada, Wyoming, Utah, Arizona, Colorado, and New Mexico

Pacific

◦ – Washington, Oregon, California, Alaska, and Hawaii

2017 Business Creation Index

2017 Business Creation Index

The National Association of REALTORS®, “The Voice for Real Estate,”

is America’s largest trade association, representing 1.2 million members, including

NAR’s institutes, societies and councils, involved in all aspects of the real estate

industry. NAR membership includes brokers, salespeople, property managers,

appraisers, counselors and others engaged in both residential and commercial

real estate.

The term REALTOR® is a registered collective membership mark that identifies a

real estate professional who is a member of the National Association of REALTORS®

and subscribes to its strict Code of Ethics.

Working for America’s property owners, the National Association provides a facility for

professional development, research and exchange of information among its members

and to the public and government for the purpose of preserving the free enterprise

system and the right to own real property.

NATIONAL ASSOCIATION OF REALTORS®

RESEARCH DIVISION

The Mission of the National Association of REALTORS® Research Division is to collect

and disseminate timely, accurate and comprehensive real estate data and to conduct

economic analysis in order to inform and engage members, consumers, and policymakers

and the media in a professional and accessible manner.

To find out about other products from NAR’s Research Division, visit

www.REALTOR.org/research-and-statistics.

NATIONAL ASSOCIATION OF REALTORS®

Research Division

500 New Jersey Avenue, NW

Washington, DC 20001

202-383-1000

data@realtors.org