What Does Latest Jobs Number Mean for U.S. Office Markets?

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With uncertainty permeating the financial markets and global economic outlook in early 2016, CBRE Group has been monitoring key office market indicators for any impact of these factors on tenant demand. So what do the latest jobs numbers tell us?

According to the Bureau of Labor Statistics' preliminary numbers, the primary office-using sub-sectors added an average of 40,000 jobs in January and February 2016, a slowdown from the robust 73,000 monthly average in Q4 2015. However, this was similar to 2014 and 2015 when office-using employment growth got off to a sluggish start in the first quarter, before subsequently picking up later in the year. Seasonal factors, including atypical weather patterns, may have impacted the data during these periods. On an annual basis, office-using job growth was strong, exceeding 2% in February 2016 for the 19th-consecutive month. Annual office job growth has outpaced overall job growth in all but two months since September 2010, when both sectors resumed adding jobs on a year-over-year basis.
 
CBRE reports that while it is premature to draw definitive conclusions from two months of data (and preliminary data at that), office-using job creation through early 2016 appears to have been stable, resilient and, thus far, consistent with the trend during the last few years. The early data support their view for 2016 that office-using job growth will fuel tenant demand which, in combination with still-low levels of construction activity, will result in the vacancy rate approaching pre-recession levels by year-end.
 
Andrea Cross, Americas head of office research for CBRE tells World Property Journal, "Office-using employment proved resilient in the first two months of 2016, increasing at a healthy pace even amid financial market volatility and fears regarding a global economic slowdown. Nearly all sub-sectors of office-using employment added jobs during the period, illustrating the breadth of job creation across industries and beyond just the tech-driven markets that led coming out of the recession."