Study finds D.C. a ‘close to average’ job growth market
When it comes to food and dining, Washington, D.C. has become a top destination and market. That’s something that has been hammered home in various ways in media, most notably in 2016, when it was named Restaurant City of the Year by Bon Appetit Magazine. When it comes to job growth and commercial real estate (CRE) growth, however, D.C. is not found at the top of the list, but rather, among average performers.
A new study by Cushman and Wakefield revealed economic performance factors among 35 metropolitan statistical areas (MSAs) , including their share of job growth and commercial real estate vitality. A Spotlight on U.S. Employment: A Tale of 35 MSAs analyzed job growth and commercial real estate factors, including total absorption rates (change in available commercial real estate space on the market) and property value changes over the last nine years.
‘Longest sustained’ overall job growth
Overall, the U.S. has experienced the “longest sustained” period of job growth with 8.5 years of consistent increase in the post-World War II era, says Cushman and Wakefield, but job growth has not been evenly distributed.
Also, in this analysis, the national nine-year average job growth rate of 13.5 percent was outpaced by the employment growth performance of the 35 MSAs analyzed. The selected MSAs, which were divided into four groups—All Stars, Overachievers, Middle of the Road, and Late Bloomers—achieved an average 18.5 percent employment growth, which ranged from a low of 7.6 percent to 38.1 percent. On a national scale, the report found a high correlation between job growth and commercial absorption.
Middle of the Road MSAs
Among the MSAs, the analysis positioned D.C. as a Middle of the Road performer. Greater D.C ranked tenth in that group. With below average job growth, it posted commercial absorption of 10,663.7K square feet and a 1.4 percent change in property value. Chicago and Detroit joined D.C. as below-average job growth performers.
The Middle of the Road category increased employment by an average of 15.4 percent and accounted for 26 percent of the employment in all MSAs. Boston, Orange County, Calif., Portland, Raleigh Durham, Salt Lake City, Detroit, Chicago, and San Diego outperformed the D.C. market. The D.C. region, however, topped Minneapolis and Indianapolis in this category.
Below are the top three MSAs from each group:
All Stars. Best of the best in terms of jobs added from 2009-2018
- New York City
- San Francisco
Overachievers. Job growth well above the national average, ranging from 18.5 to 22.5 percent
Middle of the Road. these are MSAs with employment growth close to national average; includes three distinct groups: large Metros, moderate-sized Metros and smaller MSAs with strong employment growth.
- Orange County, Calif.
Late Bloomers. Experience job growth in the latter half of the nine-year study period
- Las Vegas
Naturally, Greater D.C. is evolving. With a greater ability to attract sectors with more robust job growth, including technology (as with Amazon’s opening of a new Arlington, Va. campus) and a growing government sector, D.C.’s job market will improve. Overall for the 35 MSAs, Cushman and Wakefield pointed out that many local factors are at play here, and that understanding the local job market can reveal what’s behind the performance of commercial real estate market.
View the full report on the Cushman and Wakefield website.
Photo credit: Brandon Mowinkel
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