What Does the January Jobs Report Say About Commercial Real Estate and REITs?
February 8, 2022 | Calvin Schnure | Nareit
Job growth in January was a robust 467,000, a strong gain in total employment that is even more remarkable considering the challenges caused by the omicron wave of the pandemic. The January jobs report includes additional information demonstrating the momentum the job market has had in recent months. In particular, the annual benchmark revision showed that job gains averaged 575,000 per month in the second half of 2021, a slight acceleration from the 535,000 monthly average during the first half of the year.
Solid macroeconomic fundamentals, including the headline jobs figures, are good news for commercial real estate and REITs, as a growing economy generates increased demand for leased commercial space. The jobs report includes details on employment by industry sector that has additional information about the outlook for different real estate property types:
Office markets: The return-to-office is an important factor in the outlook for office real estate (although in the longer run, the peak space needs for team days when most workers are in the office will be the main driver of market demand, not the medium-term path getting to that point). In the early months of the pandemic, 46 million employees were working from home, leaving many office buildings nearly empty during the work week. There has been a steady return-to-office, however, with an average 3.3 million workers returning to the office each month from June 2020 through Dec. 2021.
