CRE Overbuild Risk Index (By Metro + Asset Type)

Loan Analytics, LLC
2 days ago
22 min read

Introduction: Measuring Overbuild Risk in Commercial Real Estate

Investors and lenders in commercial real estate (CRE) are increasingly turning to an Overbuild Risk Index to gauge where new development may be outpacing demand. Overbuild risk refers to the danger of oversupply – too much new space coming online relative to tenant demand – which can drive vacancies up and rents down. This index tracks key factors like construction pipelines (upcoming new supply), current vacancy rates, and demand forecasts across different U.S. metro areas and property sectors. By mapping these risks by metro and asset type, stakeholders gain a forward-looking tool to identify markets that could face overbuilding challenges.

After a period of frenetic construction in the late 2010s and early 2020s, many U.S. markets are seeing signs of cooling demand and rising vacancies. Development has been especially high in sectors like industrial warehouses and multifamily apartments, fueled by surging e-commerce and housing needs. Now, with interest rates higher and economic growth moderating, certain cities stand out for potential oversupply. For example, Las Vegas, Austin, and Miami have recently experienced supply surges that threaten to push vacancies higher across multiple property types. And in office markets such as Boston and San Francisco, a combination of new deliveries and weakened tenant demand (from tech layoffs and remote work) has created a glut of space.

This article dives into the Overbuild Risk Index by metro and asset type, highlighting which markets and sectors carry the highest oversupply risks. We will explore each major property type – Industrial, Office, Multifamily, and Retail – with data-driven insights. An interactive map/dashboard format allows readers to visualize these risks geographically, and toggle between asset classes to see where, for instance, industrial overbuilding is concentrated versus where the office sector is most under stress. By understanding both the supply pipeline and the forward demand signals (e.g. growth in logistics, healthcare, tech, or retail industries) behind each sector, readers can better anticipate which markets might face rent softening or financial strain due to overdevelopment.

What is the CRE Overbuild Risk Index?

The CRE Overbuild Risk Index is a composite metric designed to quantify oversupply risk in commercial real estate markets. It combines several indicators to produce a relative risk score for each metro and property type. Key components typically include:

Construction Pipeline Intensity: The volume of new construction (underway or planned) relative to the existing stock. A high pipeline (e.g. new space equating to 10%+ of current inventory) signals potential supply surge.
Current Vacancy and Absorption Trends: Markets with rising vacancies and negative absorption (more space becoming vacant than leased) are flashing warning signs. High vacancy rates suggest demand isn’t keeping up with existing supply.
Demand Forecasts / Tenant Industry Outlook: Forward-looking signals from major tenant industries that occupy each property type. For instance, logistics and e-commerce growth drive industrial space demand, while tech sector hiring or layoffs influence office demand. Strong growth in tenant industries can absorb new space, whereas stagnation or decline can turn a supply wave into oversupply.
Economic and Demographic Trends: Job growth, population migration, and income trends in a metro affect how much new real estate can be supported. Rapid in-migration might justify more development (lowering risk), whereas population stagnation raises red flags if construction is high.
Historical Absorption Capacity: Some markets historically absorb new supply better than others. The index accounts for how quickly past new deliveries were leased up.

By scoring and weighting these factors, the index produces an interactive risk map. Users can select an asset type (e.g. industrial or office) and see metros color-coded by risk level (low, moderate, high). The dashboard might also include filters or toggles to overlay additional data, such as recent rent growth or economic indicators, providing context for each market’s risk profile.

It’s important to note that overbuild risk is as much about demand as supply. A huge construction pipeline in a high-growth market might be sustainable, while even modest construction in a no-growth market can spell trouble. As Cushman & Wakefield analysts observed, the risk of overbuilding is “just as much a function of demand as it is supply”. In other words, new development must be measured against the expected demand in that location. The Overbuild Risk Index attempts to do exactly that – highlighting where supply-demand imbalances are most likely to occur.

Below, we break down the index findings by each major property sector, identifying metros of concern and the factors driving their risk scores.

Industrial Sector: Booming Logistics vs. Cooling Conditions

Industrial real estate (warehouses, distribution centers, logistics facilities) experienced a construction boom in recent years, propelled by the e-commerce surge and companies reconfiguring supply chains. Nationally, industrial vacancy rates hit a record low around 1.5% in 2022, which encouraged developers to add space aggressively. As of mid-2025, however, the industrial market is normalizing from its frenetic pace – the national vacancy rate has risen to about 4.1% (still low, but up sharply from the trough). Some formerly undersupplied markets are now seeing vacancies increase as new buildings come online.

Several high-growth logistics hubs show the highest overbuild risk in the industrial sector:

Las Vegas, NV: An example of a Sunbelt logistics hub where development has surged. Las Vegas has a construction pipeline that, as a percentage of existing industrial inventory, is among the largest in the nation. Vacancy rates in Vegas industrial properties have already climbed to more than double the U.S. average (national industrial vacancy ~4%, Vegas around 8% or higher). This suggests that supply is outpacing current demand in the metro’s warehouse market. Las Vegas’ risk index is high because continued deliveries could further push up vacancy and suppress rent growth.
Phoenix, AZ: Phoenix led the country in industrial absorption for several years, driven by big-box distribution demand. But it also has one of the largest pipelines (over 10% of stock under construction). Vacancy in Phoenix has crept up as new centers deliver, and the Overbuild Risk Index flags Phoenix due to its heavy ongoing development. The good news is recent demand has been strong – Q3 2025 saw Phoenix lead net absorption gains – but if demand softens at all, the market could tip into oversupply quickly.
Charleston, SC and Fort Worth (Dallas–Fort Worth), TX: Both mid-sized industrial hubs with outsized development relative to historical levels. Charleston’s and Fort Worth’s vacancy rates are already more than double the national average, reflecting that new supply is struggling to find tenants at the same pace it’s delivered. These markets rank high on the risk index, indicating caution for investors as vacant space accumulates.
Austin, TX and Riverside (Inland Empire, CA): Austin’s industrial scene expanded alongside its population growth and tech sector needs, and it has a robust pipeline. The Inland Empire (Riverside/San Bernardino) has been an e-commerce focal point (serving Southern California). Both still enjoy relatively healthy demand, but massive construction in recent years puts them on the watchlist for potential oversupply if absorption slows. Austin, for instance, is one of the metros expected to “buck the trend” of slowing supply nationally with a strong pipeline; the index monitors whether local demand (population and manufacturing growth) can keep up.

Demand signals: The industrial sector’s fate is closely tied to logistics and retail trends. On the positive side, U.S. warehousing and logistics industry revenues grew at ~2.6% annually from 2019 to 2024, showing persistent growth which underpins space demand. Even in 2025, companies like major retailers are leasing big distribution centers, and e-commerce firms continue to expand their logistics footprints. This sustained tenant demand has helped markets like Indianapolis and Phoenix absorb space quickly. However, demand is reverting to pre-pandemic normals. After the pandemic-fueled spike, online sales growth has moderated, and firms are becoming more cost-conscious with space. The Overbuild Risk Index takes into account that industrial space under construction nationally fell to its lowest level since 2018 by late 2025, a sign that developers are tapping the brakes. Notably, new projects are increasingly concentrated in markets with proven demand (e.g. Dallas-Fort Worth, Houston) – a healthy sign that could mitigate oversupply risk.

Outlook: Industrial overbuild risk is highest in pockets where speculative construction overshot near-term demand. Investors should monitor vacancy and rent trends in the above-mentioned metros. If vacancies continue to rise and rent growth stalls, it may indicate the market needs time to absorb the new inventory. Conversely, strong leasing activity (perhaps from third-party logistics, retail distribution, or even manufacturing tenants reshoring operations) can quickly right-size the market. In summary, the industrial index tells a story of selective risk: most U.S. markets remain undersupplied or balanced, but a few high-growth areas are at risk of excess warehouse capacity if demand doesn’t keep matching the new supply.

Office Sector: Remote Work and Repricing of Space

Few sectors have experienced as dramatic a demand shift as office real estate. The rise of remote and hybrid work, coupled with tech sector turmoil, has fundamentally altered office usage. The Overbuild Risk Index for offices is high in many metros not because of new construction (which has actually slowed) but due to a collapse in demand for existing space. In essence, effective oversupply has emerged as companies shrink their footprints.

National office vacancy hit an all-time high around mid-2025, reaching approximately 20.7% in Q2 2025. This is a staggering jump from pre-pandemic vacancy levels (which were in the single digits). Such a glut of empty space represents a structural challenge for office landlords. Markets that were once tight are now grappling with half-empty buildings, especially in downtown cores. The Overbuild Risk Index flags the following office markets as particularly at risk:

San Francisco, CA: The poster child of the tech-driven office boom and bust. San Francisco’s office vacancy has soared to about 27–28%, up from roughly 8% in 2019. This means more than a quarter of SF’s office space is sitting vacant – a result of massive tech company layoffs, ongoing remote work policies, and new buildings (including formerly hot life-science labs) hitting the market at the worst possible time. In fact, an oversupply of life science lab space in SF has contributed to vacancies near 30% in that niche. The city’s tech layoffs and downsizing are well documented: over 260,000 tech jobs were shed nationally in 2023, and major Bay Area employers like Meta and Salesforce have given up large office leases. With sublease space flooding the market, San Francisco ranks at the top of the overbuild (or rather over-empty) risk index for offices.
Boston, MA: Another market where a specialized boom has turned to glut. Boston rode a life-sciences real estate craze, adding many lab-capable office buildings. Now, with biotech funding cooling and some projects delayed, vacancy in Boston’s life science real estate hit roughly 34%. Overall office vacancy in Boston is lower than San Francisco’s, but certain submarkets (especially those heavy in lab space or older office stock) are struggling. Boston’s risk index is elevated due to these pockets of high vacancy and the question of how quickly space can be repurposed or absorbed by other industries.
New York City, NY: The nation’s largest office market has a mixed story. Midtown and prime assets have held up relatively better (thanks to finance sector returning to office), but Downtown Manhattan’s vacancy has neared 23%, and many older Class B/C buildings citywide are largely empty. Big tenants in tech and media have pulled back. For example, Meta (Facebook) is ending a major Manhattan lease and returning 275,000 sq. ft. of space. The Overbuild Risk Index flags New York as moderate-to-high risk: not because of new construction (New York has high barriers to new builds) but because demand contraction left millions of square feet unused. The city’s saving grace is a diversified tenant base and adaptive reuse momentum (converting offices to residential), which can gradually reduce oversupply.
Secondary Tech Hubs (Seattle, Austin, Charlotte, etc.): Cities like Seattle and Austin that saw tech sector expansion in the 2010s now have significant office softness. Seattle’s major tech tenants downsized or paused growth, leading to a trickle of leasing activity. Austin, despite overall growth, has a lot of new office space delivered during the pandemic that is leasing slowly. Charlotte, NC saw its vacancy hit ~23%, partly from new towers opening alongside some tenants contracting. These markets have moderate overbuild risk scores, since some still have population and employment growth to backfill space over time. But for now, supply (both new buildings and second-hand sublease space) is abundant relative to hesitant demand.

Demand signals: The key driver for office is the shift in workplace strategy. Remote work went from near-zero to a permanent fixture for many companies, instantly reducing required office space per employee. While some return-to-office is happening, utilization remains well below pre-2020 levels in most cities (many downtown offices see 50–60% of pre-pandemic occupancy on average weekdays). Tech industry retrenchment is another blow: as noted, the tech sector not only halted its expansion, it has been actively giving up space in many cities. Even when tech firms are hiring again, they are optimizing their real estate – favoring high-quality, flexible spaces over large traditional leases. On the flip side, certain industries – finance, law, healthcare, government – are bringing employees back more, which has kept demand alive especially for Class A offices in prime locations. This “flight to quality” trend means newer, amenity-rich buildings are doing relatively well (high occupancy), while older buildings see far higher vacancy. Therefore, the Overbuild Risk Index for office also considers quality and obsolescence: some markets might not be overbuilt in terms of raw square footage, but they are “overbuilt” with obsolete offices that no longer match tenant needs.

Outlook: The office sector’s oversupply is a complex, long-term issue. New construction of offices has slowed to a crawl in most cities (which prevents the index from skyrocketing further on supply). The real question is how fast demand can rebound – or how much supply can be permanently removed or repurposed. Markets at high risk will likely need creative solutions (conversions to residential or other uses, demolitions, or major upgrades) to whittle down excess inventory. In the meantime, investors and lenders are extremely cautious on office properties, especially in markets with high vacancies. Notably, as of late 2023, offices made up ~41% of the value of distressed CRE assets in the U.S., showing how vacancy and cash flow issues translate into loan stress. The Overbuild Risk Index will remain elevated for office-heavy metros until either demand catches up or supply is structurally reduced.

Multifamily (Apartments) Sector: Construction Wave Peaks, Absorption in Sight

The multifamily housing sector (rental apartments) has been riding an unprecedented construction wave. Fueled by a housing shortage and years of rising rents, developers ramped up apartment construction to levels not seen since the 1980s. As of 2024-2025, the U.S. had roughly 927,000 multifamily units under construction, about double the pipeline before the Great Recession. This surge raised concerns about oversupply in certain cities, particularly as higher interest rates and slowing household formation cooled off demand in the short term. However, multifamily demand fundamentals (like the need for housing from millennials and Gen Z renters) remain strong in the long run. The Overbuild Risk Index for multifamily therefore shows a nuanced picture: near-term oversupply risk in select metros, but an overall backdrop of housing undersupply nationally.

Key metros to watch in the multifamily overbuild risk ranking include:

Nashville, TN: A booming Sunbelt metro that attracted many developers. Nashville has one of the highest ratios of apartments under construction to existing inventory (on the order of ~7–8% of stock). This new supply is hitting just as Nashville’s job and population growth cool slightly from red-hot to merely warm. The Overbuild Risk Index flags Nashville because its deliveries are surging ahead of demand in the near term. Lease-up times are lengthening, and concessions (landlord incentives like free rent) are on the rise, indicating the market needs time to digest the new units. On the positive side, Nashville’s long-term housing demand is supported by strong in-migration and a growing economy, so any oversupply may be temporary.
Charleston, SC: Similar story to Nashville – very high construction relative to a mid-sized population. Charleston is experiencing Sunbelt in-migration, but not enough to fill all the new apartments immediately. The index is high for Charleston due to the gap between short-term demand and the construction boom.
Austin, TX and Raleigh, NC: These tech-friendly metros had enormous population inflows and housing demand in recent years. Developers responded vigorously. Austin’s pipeline is huge, though Texas’ fast growth and limited zoning constraints mean oversupply can occur (Austin saw rent dips in 2023 as many units delivered). Raleigh likewise has a lot of new projects. Both markets have decent demand tailwinds (people keep moving in), but the question is timing – will it take a year or two for absorption to catch up? The index puts them in moderate risk: not crisis levels, but worth watching vacancy upticks.
Miami, FL: South Florida’s multifamily construction has ramped up to record levels, with Miami leading deliveries. While Miami’s population is growing, it’s not on par with places like Austin or Phoenix, and many new units are luxury targeting affluent renters or relocators. There’s some concern that Miami’s pipeline (as well as Fort Lauderdale and West Palm Beach nearby) could overshoot what local renters can afford or absorb in the short run. Indeed, demographic and job growth slowdowns may extend lease-up times in Miami, keeping its risk index elevated.
Kansas City, MO/KS and Salt Lake City, UT: Mid-tier metros that surprisingly have very large apartment development relative to their growth. These “overlooked” markets saw developers chasing yield, but they may find it takes longer to fill units. They rank on some lists of potential oversupply because their demand is steady but not explosive.

Meanwhile, some large markets are notably low risk for multifamily overbuilding:

Chicago, IL: Construction has been relatively restrained, and CoStar data showed Chicago’s pipeline stayed closer to historical norms, avoiding overbuilding. Chicago has actually under-built relative to demand in some years, keeping vacancy manageable.
New York City, NY and Los Angeles, CA: These expensive coastal markets have so many people and such high barriers to building that even a big jump in construction doesn’t necessarily glut the market. In fact, New York has a perennial housing shortage. Much of the new construction there gets absorbed, and vacancy remains low (NYC’s rental vacancy is often in the low-single digits). The index scores for NYC and LA reflect low oversupply risk in multifamily, except perhaps in a few luxury towers.

Demand signals: The core demand drivers for apartments are population growth (especially young adults), job growth, and affordability relative to owning homes. Over the past couple of years, demand has seesawed – 2021 was a record year of apartment absorption (people formed new households in droves, rents skyrocketed), but 2022-2023 saw a slowdown in household formation, partly due to economic uncertainty and lack of affordability. As a result, in 2023 and 2024 apartment demand lagged new deliveries significantly, creating higher vacancies in many cities. However, underlying needs haven’t disappeared: the U.S. still faces a cumulative housing shortage (some estimates are a deficit of 4+ million housing units nationwide). Markets showing short-term oversupply likely still have long-term demand. For example, an analysis noted that while vacancies might rise in the near term, the housing shortage means they will “fall quickly as new supply is absorbed” once the initial wave is rented out. Additionally, many high-supply markets are those with “outsized demand” from pandemic migration – meaning they needed more housing, just perhaps not all at once. The Index incorporates forecasts of renter household growth; if a city’s population and job outlook remain strong, its oversupply condition may be a temporary blip.

Outlook: The multifamily Overbuild Risk Index is likely to peak in 2025 and then gradually improve. Construction starts are already slowing (financing costs and construction costs spiked, discouraging new projects). Many developers have pulled back, and some projects in planning may be canceled or delayed. This will allow the wave of 2022-2024 completions to lease up. By 2026 and beyond, as long as the economy avoids deep recession, absorption should catch up. Rents have already softened or declined slightly in some overbuilt markets in 2023, but are expected to stabilize as the supply-demand gap narrows. For investors, the next 12-18 months might present opportunities in markets where short-term oversupply has made assets more affordable, but where long-term rental demand is solid. Conversely, caution is warranted in markets with high vacancy and continuous building – those may struggle longer to regain balance. Monitoring metrics like lease-up velocity, concession levels, and job growth will be key to knowing when an overbuilt market is turning the corner.

Retail Sector: Localized Pockets of Growth vs. Cautious Expansion

The retail real estate sector (encompassing shopping centers, strip malls, standalone stores) has had relatively low levels of new construction in recent years – a stark contrast to the 1990s and 2000s when retail was often overbuilt. The rise of e-commerce and the retail apocalypse of the late 2010s led to many store closures, which in turn meant few new retail projects got financed. Coming into the mid-2020s, the U.S. actually has a very low retail space growth rate nationally (often less than 0.5% per year). This cautious approach means that, broadly speaking, the retail sector has less oversupply risk than other sectors. In fact, in some areas, lack of modern retail development has left unmet demand (e.g. newly built suburbs without enough shopping centers). However, the Overbuild Risk Index does identify a few metro areas where retail construction is picking up significantly, raising a yellow flag:

Austin, TX: Austin’s population explosion has attracted a wave of retail development. Post-2020, several large mixed-use and open-air shopping projects have broken ground around Austin. The data shows Austin’s retail inventory is set to grow at about ~2.0% annually in 2025-2026, compared to well below 1% annually in the late 2010s. This is one of the fastest paces in the country, making Austin a higher-risk outlier in an otherwise slow-growing retail sector. The question is whether local consumer spending and population growth can justify all the new shops – given Austin’s strong economy and continued inflow of residents, many analysts are optimistic, but it’s a market to watch.
Phoenix, AZ: Similar to Austin, Phoenix saw pandemic-era population shifts that boosted housing and thereby retail needs. Retail developers responded with new centers in fast-growing suburbs of Phoenix. The Index notes Phoenix’s retail stock growth jumped to over 2% from ~0.7% previously【24†】. Phoenix’s risk is mitigated by the fact that it truly did have under-retailed areas after years of scant construction – now catching up as new rooftops (homes) go up. Nonetheless, if the economy slows, some of these new retail projects might struggle to lease up with national tenants, as retailers remain selective in expanding physical stores.
Tampa, FL and Miami, FL: Florida’s population boom during 2020-2022 spurred some new retail as well. Tampa’s retail pipeline has grown, and Miami has a few notable projects (including retail components of mixed-use developments). Both metros have retail growth rates modestly above the national average. The risk index for these is not extremely high, but moderate – they hinge on continued consumer spending strength and tourism (especially in Miami’s case where tourism drives retail).
Las Vegas, NV: Known for hospitality and entertainment, Vegas also saw a jump in retail development (though some of it is tied to new casinos/resorts adding shopping areas). With a growing resident population and record tourism recovery, Vegas retail demand is solid, but if visitor numbers or local spending falter, a wave of new retail space could face high vacancy.

Most other metros are seeing minimal retail construction. In fact, in many big cities (Chicago, New York, San Francisco), virtually no new malls or shopping centers are being built beyond small infill projects. As a result, those markets often have the opposite problem – not enough modern retail in growth neighborhoods – which keeps vacancies low and rents stable. The Overbuild Risk Index for retail is low in such places, or not applicable due to lack of new supply.

Demand signals: The fate of retail space depends on consumer behavior and retailer expansion plans. Right now, retailers are adapting to an omni-channel world, balancing e-commerce with brick-and-mortar. Many large chains closed underperforming stores pre-2020, so the remaining footprint is leaner and healthier. That means when retail sales are good, retailers may actually need to open some new stores (particularly discount, grocery, home improvement, and experiential retail categories). In the past couple of years, segments like grocery-anchored centers and essential retail have performed well, often at record occupancy. There’s also a trend of some online-native brands opening physical stores. These positive demand signals support new retail development in high-growth areas. Pandemic migration to suburbs and Sunbelt metros created opportunities for new shopping centers where new communities lacked retail. However, headwinds remain: if consumer spending dips (due to inflation or recession fears), retailers will pull back. Also, e-commerce is still growing (albeit at a normalizing rate), which caps how much new retail space is ultimately needed nationally.

Outlook: The Overbuild Risk Index suggests retail is the least overbuilt sector overall. Even in the “hot” markets like Austin or Phoenix, the absolute amounts of new space are modest in comparison to, say, what’s happening in multifamily or industrial. This means retail landlords have a bit more breathing room. For investors, retail’s challenges are less about oversupply of new buildings and more about the quality and location of existing centers – older malls in declining areas are struggling, but that’s a different issue (more about obsolescence than new overbuilding). Going forward, retail development is likely to remain targeted and moderate. Developers and lenders remember the early 2000s when overbuilding retail led to high vacancies; they are unlikely to repeat that on a broad scale. Instead, we’ll see retail follow the rooftops: if a metro continues growing in population and income, then new retail projects will get built, usually at a pace to meet that demand. The Index will keep an eye on any market where retail construction suddenly spikes without a clear demand story, but presently those are few.

In summary, retail real estate’s oversupply risk is localized – mostly in a few booming Sunbelt cities – and even there it’s a far cry from the kind of overhang we see in office or apartments. As long as developers and retailers stay disciplined, retail should avoid severe overbuilding. The interactive map for retail shows most metros in the low-risk green, with only a handful (like Austin, Phoenix) edging into higher risk coloring due to their recent development spurts.

Summary: Insights from the Interactive Overbuild Risk Dashboard

Bringing it all together, the CRE Overbuild Risk Index dashboard offers a comprehensive, map-based view of supply risks across U.S. markets and property types. Here are the key takeaways and how to use this tool:

Industrial: Watch the distribution hubs in the Southwest and Southeast. Many are red or orange on the risk map due to big pipelines. Look at Las Vegas, Phoenix, Charleston, Austin which light up as high risk for potential oversupply in warehouses. But also note where demand is strong – the index might show moderate risk in places like Dallas or Atlanta that have construction but also solid absorption (their risk scores may be lower than raw supply numbers suggest, factoring in demand).
Office: The risk map for office will have a lot of red in major metros: San Francisco, Silicon Valley, Seattle, New York, Chicago – reflecting high vacancy and weak demand. Interestingly, some smaller cities or those with government anchors (e.g. Washington D.C.) might show lower risk if their supply was curtailed and occupancy decline wasn’t as severe. Use the map’s filters to differentiate between downtown vs. suburban submarkets if available, since oversupply can be hyper-local. The index essentially warns that office is a tenant’s market in many cities, with far more space than users.
Multifamily: The multifamily risk map highlights certain Sunbelt and Mountain West metros in high-risk colors: Nashville, Austin, Miami, Raleigh, Salt Lake City, Charlotte, etc. These are the ones with a heavy near-term supply. Conversely, many Rust Belt and Coastal markets are green (low risk) because of limited building. Importantly, the dashboard might offer a slider for year – showing that by, say, 2027, risk in today’s overbuilt apartment markets subsides as units get absorbed (assuming demand projections hold). This dynamic view helps investors time their decisions (e.g., potentially acquire in an overbuilt market after the peak, when prices are softer but before rents recover).
Retail: The map for retail risk is mostly green nationwide, with a few yellow spots in high-growth metros. It underlines that most of the U.S. is not adding retail space in excess. Where it is yellow/red, clicking the metro (e.g. Austin) would show details like “Annual retail inventory growth 2025–26: 2.0% vs National average 0.5%” and perhaps current retail vacancy rates. This provides context that even “high” risk in retail is relative.

Below is a summary table of selected metros and sectors flagged by the Overbuild Risk Index, illustrating where oversupply concerns are most pronounced:

Asset Type	High Overbuild Risk Metros (Examples)	Risk Factors & Notes
Industrial	Las Vegas, NV (vacancy > 8%); Phoenix, AZ; Charleston, SC; Fort Worth, TX	Huge warehouse construction pipelines relative to existing stock; vacancies rising as new supply outpaces demand. These markets boomed with e-commerce, now testing demand limits.
Office	San Francisco, CA (vacancy ~28%); Boston, MA (lab space glut); New York, NY; Seattle, WA	Weak demand from remote work and tech retrenchment has led to record-high office vacancies. New supply is limited, but even existing space is underutilized (excess). High-risk especially in tech-heavy cities.
Multifamily	Nashville, TN; Charleston, SC; Austin, TX; Miami, FL; Raleigh, NC	Rapid apartment construction wave – pipelines equal 5–8% of inventory in some Sunbelt cities. Near-term lease-up challenges expected as demographic and job growth cool off. Long-term demand still strong, so oversupply may be temporary.
Retail	Austin, TX; Phoenix, AZ; Tampa, FL (moderate risk)	Most metros have low retail construction (national avg <0.5% growth). Austin and Phoenix stand out with ~2%+ retail stock growth following population surges. Risk is localized – requires continued consumer spending and population support.

How to use the dashboard: An investor or lender can use the interactive map to drill down into any metro of interest. For example, selecting Dallas-Fort Worth might show: Industrial Risk = Moderate (large pipeline but very strong tenant demand), Office Risk = Moderate (vacancy up but some back-to-office stabilization), Multifamily Risk = Moderate (high supply but also nation-leading population growth), Retail Risk = Low (little new retail built). In contrast, selecting San Francisco would reveal: Industrial Risk = Low (limited industrial inventory to begin with), Office Risk = High (see vacancy and sublease data), Multifamily Risk = Low (housing undersupply despite some new high-rises), Retail Risk = Low (very little new retail, though existing stores face other challenges). This comparative approach helps pinpoint not just which markets are risky, but in which sectors. It underscores that overbuilding is not uniform – each metro has its own story.

Conclusion: Navigating the Risks of Overbuilding

The CRE Overbuild Risk Index (By Metro + Asset Type) is an invaluable tool in today’s evolving real estate landscape. By quantifying where supply growth and demand fundamentals are misaligned, it enables stakeholders to make informed decisions. For lenders, a high risk index in a market or sector might signal tighter underwriting or avoidance of new construction loans in that area. For investors and developers, it highlights where caution is warranted – or conversely, where opportunities lie (for instance, a low-risk market might support that new project you’re considering, whereas a high-risk one might prompt you to pivot to renovations or other strategies).

Several overarching insights emerge from the current index readings:

The Office sector requires the most strategic caution – oversupply here is more about demand destruction than overbuilding per se. Until usage patterns change, many office-heavy metros will remain tenant-favorable. Adaptive reuse and economic shifts (like AI or new industries requiring space) will be key to recovery.
Industrial and Multifamily sectors are in the midst of absorbing a lot of new supply. These are fundamentally driven by strong long-term demand (from e-commerce and housing needs respectively), so the oversupply risks, while real in the short run, may prove transitory in many markets. Still, investors should expect some pressure on rents and occupancy in the most construction-heavy cities over the next year or two.
The Retail sector has so far avoided widespread overbuilding, a silver lining from the hard lessons of the past decade. Oversupply risk in retail is mostly confined to places where developers are betting on continued high growth. Keeping an eye on consumer trends and retail sales in those locales will indicate if that bet is paying off.
Macro factors like interest rates, labor markets, and material costs also act as a natural brake on overbuilding. The recent spike in financing costs has already slowed new project starts. This means the pipeline in many sectors will taper in coming years – a healthy development that should prevent severe oversupply from worsening and allow demand to catch up. High construction costs and regulatory hurdles (especially in coastal cities) further “rein in overbuilding” in certain places, which is why some traditionally supply-constrained metros remain relatively balanced.

In essence, the Overbuild Risk Index and interactive dashboard offer a forward-looking radar for CRE professionals. By monitoring where “imbalances between new inventory and underlying demand persist”, one can anticipate challenges such as rising vacancies, falling rents, or refinancing difficulties. It equips stakeholders to proactively manage risk – whether that means reallocating capital to lower-risk markets, renegotiating leasing strategies, or timing acquisitions to coincide with market troughs.

As of 2025, the index shines a spotlight on a tale of two worlds: high-growth Sunbelt markets grappling with the hangover of rapid development, and slow-growth, supply-constrained markets dealing with different issues (like outdated stock but not too much new stock). Both scenarios require savvy navigation. The Overbuild Risk Index (by Metro + Asset Type) will continue to be updated, incorporating the latest data on construction, absorption, and economic trends. By staying tuned to this index – perhaps via an interactive map or dashboard that is regularly refreshed – investors and lenders can stay ahead of the curve and avoid the pitfalls of being caught in an overbuilt market. After all, in commercial real estate, supply and demand balance is everything: when it tilts too far, value can erode quickly. With the right intelligence tools, such as this index, one can ensure that growth ambitions remain grounded in market reality, striking that fine line between development and overdevelopment.

Sources:

CoStar GroupU.S. Commercial Real Estate Market Analytics and News
Cushman & WakefieldGlobal and U.S. Market Research
Database Loan Analytics
CBRE ResearchU.S. Real Estate Market Outlooks
JLL ResearchCommercial Real Estate Market Insights
U.S. Bureau of Labor Statistics (BLS)Employment and Industry Data
U.S. Census BureauDemographic and Housing Data
Federal Reserve Economic Data (FRED)Macroeconomic Indicators