Employment Rises Signaling Tightening Office Sector

NEW YORK CITY-The US Department of Labor released its Employment Situation Summary this morning for the month of October. Employment increased last month by 92,000 while the unemployment rate fell to 4.4%.

“It’s pretty clear that the October report is an unambiguously positive report for the US economy,” says Ken McCarthy, managing director of New York area research for Cushman & Wakefield. “This runs contrary to the sentiment we have seen out there in the last couple weeks that the economy is slowing down; it’s not really strong but it is not dying either.”

October’s employment number was lower than September’s 148,000 and August’s 230,000. Of all the job types, manufacturing and construction lost jobs last month due in part to the slowing housing market and the struggling automotive industry. Professional and business services, health care, food service and mining all saw an increase in the number of employed.

The unemployment rate puts the country back to pre-9/11 rates. The 4.4% marks the lowest rate since May 2001. “We’re now back to the levels we were at at the end of the last expansion,” McCarthy says and he doesn’t see it ending there. He predicts modest, steady job growth over the next six months with the country adding about 120,000 jobs monthly during that time period.

McCarthy points to the office using employment level as a positive sign for the real estate industry. Nationally, office using employment is up by more than 500,000 from a year ago. Each person is estimated to need 200 sf of office space, which means there has been 20 million sf of office demand this year. “This is a big reason vacancy is going down. Employment is increasing and nationally we’re not seeing the supply we need to meet demand.” These factors and rising rental rates are tightening the office market across the country.

“The message of this (unemployment) number is that even though the economy has slowed down, it’s not falling out of bed,” McCarthy says. “The economy has slowed down, the housing sector which was the biggest threat has weakened, but otherwise growth continues at a steady and not very exciting pace.”