A look at job growth in the area and its impact on the real estate market
There’s a lot to be happy about as the New Year begins, according to the Greater Fort Lauderdale Alliance, the primary economic development organization in Broward County. At the end of 2016, job growth was up in the Ft. Lauderdale – Pompano Beach – Deerfield metro area. In fact, the region’s jobless rate was 0.2% lower than the state rate, which stands at 4.8%.
The news is certainly good and welcome. And its impact on commercial real estate, along with other trends, merits closer examination.
A look at the numbers
At 4.6% in November 2016, the unemployment rate in Broward County saw an overall real percentage point decrease of 0.2% from the previous year. The area also gained a significant number of nonagricultural jobs:
- Non-agricultural jobs increased by more than 30,000 jobs, a nearly 4% increase.
- The region led the state in the trade, transportation, utilities, manufacturing, and information sectors.
- The region had the second highest annual job growth rate in the professional and business services, education and health services, and government jobs.
More money in the pocket
With more money being earned, more consumers have money to spend on things like mortgages and rent. That’s good news for the residential market.
Also predicted to reap these rewards is the industrial market. With the growth of e-commerce and guarantees of next-day shipping, there is a greater need for warehouse facilities to house goods.
According to a recent article in the Miami Herald, “trends in the industrial sector – comprising warehouse and logistics space – are a far better barometer of our local economy’s well-being.”
South Florida tenants have leased almost 19 million square feet of warehouse space over the past three years. More than 4 million more square feet is expected to come on line in the coming year, a sign of consumer activity, stability, and population growth.
And now for this commercial message
While all of this news seems encouraging – and it is – for those with a vested interest in commercial real estate, the growth is tempered with an asterisk.
Yes, greater job growth means companies are either growing or more smaller businesses are getting off the ground. Some might assume that would indicate a similarly growing need for more and/or larger office space and higher rents. But several outside forces may affect the commercial market, including:
- Open floor designs mean a smaller footprint for office space.
- Telecommuting also indicates offices do not need as much space to accommodate a large staff of employees who arrive on a daily basis.
According to Marc Miller, JLL Florida Research Manager, “A tightening and more expensive marketplace may slow growth for Class A office space, which in turn will benefit the Class B/A segment. Given the uncertainty surrounding monetary/fiscal policy from Washington, continued turmoil in closely-tied Latin American markets, and general economic sentiment that expansion is coming to an end, 2017 could likely be the last year of modest strengthening in the office market.”
A balanced view
This doesn’t mean there will be a complete shutdown of commercial development, especially in the South Florida region, and specifically because of this year’s job growth. In fact, 500,000 square feet of new office space in downtown Fort Lauderdale is currently planned.
Negotiating the coming year in commercial real estate will require knowledge, skill, and well-informed decisions. Morris Southeast Group, a South Florida leader in commercial real estate, can help you at every step of the way.
To set up an appointment for a free consultation, contact our team today at 954.474.1776, or you can reach Ken Morris on his cell at 954.240.4400 or at kenmorris@morrissegroup.com.
Tags: commercial real estate
