April Employment Data Suggest NYC Recovery is Here
26 May, 2010, New York
The improving outlook for the Manhattan office market gained further support following the recent release (Friday, May 21) of the latest seasonally-adjusted employment figures for New York City compiled by the Bureau of Labor Statistics.
On a seasonally adjusted basis, payroll employment rose by 9,800 jobs in April, which was the fourth consecutive month that jobs were added. Since December 2009, New York City has added 41,800 jobs representing a 1.2 percent increase. By comparison, the United States has seen employment increase by 0.4 percent since the end of 2009.
"On a relative basis, New York has experienced astonishing employment growth," said Ken McCarthy, managing director of New York Area Research for Cushman & Wakefield, who analyzed the seasonally adjusted data. "Despite the concentration of banking and financial services firms in New York City, virtually all of which were affected by the financial crisis, New York's employment growth in recent months is three times that of the nation."
According to Mr. McCarthy, the last time New York experienced four consecutive months of employment growth was the first four months of 2008.
For the office property market, the key employment metric is employment in office-using industries, the sum of the financial, professional business services and information (media) sectors. In April, office-using employment increased 6,500 jobs, the largest one-month increase since October 2007. Since the beginning of the year New York has added 14,800 office-using jobs.
This growth has increased demand for office space and kept the vacancy rate stable in the face of an increase in inventory of more than 1 million square feet with the completion of 11 Times Square. At the end of April, the Manhattan office vacancy rate totaled 11.5 percent, up slightly from 10.6 percent one year ago but down from 11.6 percent at the end of March. "It's another sign that the Manhattan office market is at or near a bottom," Mr. McCarthy said.
Another positive sign, according to Mr. McCarthy, is that the employment growth was widespread across multiple sectors. Employment increased in financial services, professional business services, retail, and in leisure and hospitality. Government employment declined by 500 jobs as a 4,000 person decline in employment at the state and local level more than offset a 3,500 person increase in federal employment.
Mr. McCarthy said the New York economy has turned from contraction to expansion, and that "the pace of growth has been far stronger than even the most optimistic forecasts suggested." He cautioned that there are still threats to growth, including the European financial market stress and the uncertainty surrounding financial reform in the United States.
"It now appears that the recovery is firmly entrenched and we will continue to see employment growth locally in the months and quarters ahead," said Mr. McCarthy. "For real estate market fundamentals, this is a key positive trend."
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