There was a surge in hiring among national office tenants in April, with an addition of 75,000 new jobs, an increase representing more than one-third of the growth seen during the past 12 months.
April’s improved employment statistics were reflected in most industries, with total non-agriculture new jobs rising by 288,000 and the national unemployment rate dropping to 6.3 percent, according to the U.S. Bureau of Labor. Employment in professional and business services increased by an average of 55,000 new jobs per month over the past year. The retail segment also saw an increase of about 35,000 new jobs in April, while growth in industrial employment was largely unchanged from previous months.
The office jobs increase mirrors the tightening of available space and increased office rents in many major markets, says Ken McCarthy, senior managing director of economic analysis and forecasting at Cushman & Wakefield Inc.
“We’re optimistic that we’ll see vacancy continue to drop in most markets, and rents go up, especially in cities such as San Francisco and New York City where vacancy is at record lows,” he notes.
The office sector has been patiently waiting for good news since the end of the recession, McCarthy says. However, expansions and new office leases have been slow to materialize as business executives exercised caution.
“There comes a point in the recovery that businesses are more willing to take on risk, they’re more worried about losing sales than losing costs,” McCarthy adds. “That’s what we’re anticipating will happen in the office market this year, though the growth may be tempered by firms who are focused on workspace efficiency.”
McCarthy says office experts are hoping that 2014 will prove to be the first breakout year since the recession, which reached its worst point in 2009, with a 17 percent unemployment rate and more than 15 million people left without jobs. During the past three years the country has seen a pattern of stronger job growth in the spring followed by declines in the summer, a disappointment cycle that this year may be able to break, McCarthy says. The Labor Bureau already revised February and March employment numbers upward, to 36,000 more jobs than had been reported previously.
“With business health getting better and fewer confrontations in Washington D.C., maybe we won’t get the ‘summer swoon’ as we’ve seen the past couple of years,” he says.
A full recovery is still not a sure bet for this year, McCarthy cautions. According to the Labor Bureau, one of the reasons for the unemployment drop is that almost 800,000 people left the workforce after failing at finding a job. There are approximately 10 million people who can’t find a job, according to the Bureau’s survey of households, but that number doesn’t include those who have given up in their search.
“That many people is a surprising number to be out of the labor force altogether, and indicates that maybe we’re not as healthy as the unemployment decline would suggest,” McCarthy says. “But that monthly household data is typically erratic, with big drops and jumps, so the jury’s still out on the true measure.”