The recent good news about the U.S. economy – 162,000 new jobs added in March, the largest monthly increase in three years – was as welcome as the first day of spring. All major employment sectors posted gains, except for financial services and information, even though the unemployment rate remained at 9.7 percent.
Furthermore, say many analysts, U.S. job growth over the next four years is expected to exceed the average job growth rate from the last 20 years as the economic recovery continues.
These new statistics have economists clamoring to predict how the recovery will affect different business sectors. Property owners, for example, want to know when the market will support rental rate increases for commercial space.
Grosvenor Americas, an international property group, says that while job growth will certainly put upward pressure on rental rates, supply issues also will come into play.
Austin, Fort Lauderdale, Houston, Atlanta, Denver, and Washington, D.C. are expected to experience the highest growth in rental rates, due largely to strong job growth. New York, San Francisco, and Miami are likely to have more sluggish job growth, but their scarcity of office space – due in part to physical constraints – will likely help them avoid substantive declines in office rental prices. In spite of high job growth, however, rents are expected to increase more slowly in San Jose, Seattle, and San Diego due to these cities’ ample supply of commercial space.
“Despite the differences among metropolitan areas,” said Grosvenor’s Ian Anderson, “the higher annual growth rate in employment that we expect to see over the next four years bodes well for the U.S. property market. More jobs mean that more space will be needed to house workers and production – and that’s good news for all sectors of the economy.”