What the Job Numbers Mean for CRE
In April, the U.S. job numbers painted a good story with positive impacts for commercial real estate. Unemployment rates fell to 3.9%, the lowest level in 17 years, and 164,000 jobs were added. Some economists even believe that unemployment could continue to drop to 3.5%, which hasn’t happened since 1969.
What does this mean for commercial real estate? While co-working spaces continue to lessen the demand for traditional office spaces, the new numbers show that professional/business services, including accounting, consulting, and legal services, is a growing sector, which still relies on traditional office spaces. According to Cushman & Wakefield, this sector accounted for roughly 13% of leasing volume in 2018’s first quarter.
Furthermore, 24,000 positions were added in the manufacturing industry, mostly in durable goods production. This could signal an uptick in demand for industrial properties, as facilities will need to expand for more production. NAIOP said that 2018’s industrial demand is expected to be “robust and steady.”
Despite all the good news, wage increases, GDP, and consumer spending are all lower than expected, while interest rates are likely to continue rising.
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