Record-Low Unemployment Propels Demand for Commercial Real Estate
October 2019 | Marcus & Millichap
Job growth continues at subdued but consistent pace. Organizations added about 136,000 positions in September, slightly down from the 168,000 roles filled in August. The more modest rate of employment growth nevertheless exceeded the number of new entrants into the workforce, sustaining the current labor shortage. Employers’ staffing needs will support the hiring of about 2 million personnel by year end. Potential economic headwinds, originating from trade tensions and other factors, create some risk of job creation falling below expectations.
Broad-spectrum employment growth heightens apartment demand. The ongoing surplus of job openings relative to job seekers is supporting continued hiring this year, helping reduce the national unemployment rate to 3.5 percent last month, on par with the lowest reading in 50 years. Joblessness decreased the most among construction workers and members of the financial activities sector. Unemployment also fell substantially within the trade, education, health services, leisure and hospitality sectors. New job opportunities across a wide range of income levels are creating additional demand for housing, including both high-end Class A apartments as well as more affordable Class B/C rentals. Strong summer and autumn leasing seasons have driven the national multifamily vacancy rate down to 3.7 percent at the end of September, breaking the 4 percent threshold for the first time since 2000 despite record new development.
