Small Businesses Spur Job Growth

December 5, 2011

Like holiday cheer, good news emerged last week when the Bureau of Labor Statistics reported that U.S. employers had added 140,000 new jobs in November, causing the unemployment rate to plummet to 8.6% — from 9%, in a single month. This, despite 20,000 government jobs lost during the month at the federal, state and local levels.

Moody’s Analytics Chief Economist Mark Zandi attributed much of the job growth to small businesses, and broadly across many industries, from retail and hospitality to manufacturing.

The ADP National Employment Report backed Zandi’s statement up, claiming that 206,000 private-sector jobs were created in November with only 6% by companies that have more than 500 workers, while 53% of the new jobs were created by businesses with fewer than 49 employees.

Typically, commercial real estate absorption and vacancy rate trends lag employment gains or losses by 6-12 months. We took a look at a few U.S. communities with the intent of monitoring Houston commercial real estate, San Diego commercial real estate and Portland commercial real estate.

The unemployment rate in Houston County Texas was 11.7% as of September (most current data) and trending upward, yet the citywide average office vacancy rate at the end of the third quarter was 16.0%, down from 16.6% a year earlier, according to Colliers International.

The unemployment rate in San Diego County California was 9.7% as of September and trending downward, while San Diego’s office vacancy dropped to 13.9% at the close of the third quarter, according to CoStar, which also reported net positive absorption of 532,516 square feet during the period.

In Portland, Oregon, the unemployment rate was 9.1% at the end of September and trending downward (1.3% year-to-date). Coincidentally, Portland’s Central Business District office vacancy rate was 9.1% at the close of the third quarter, down considerably from 11.9% at the end of the second quarter this year, reports Cushman & Wakefield. Meanwhile, the suburban office vacancy rate also declined steeply in the third quarter to 15.6%, from 22.6% in the second quarter this year (which C&W says was the peak of Portland’s office vacancy rate).

We’ll check these same date points after the first quarter next year to follow the relationship between employment and office vacancy trends.

Posted by Gary Marsh


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