Job growth drives multifamily market

Job growth is critical to an improved office market.

Fannie Mae recently noted that the current multifamily market recovery situation largely depends on continued job growth, as it can allow commercial property managers to increase rents without hurting their bottom line.

In May, only 69,000 net jobs were added, which was far lower than the initial estimate of 150,000, the report explained. For April, only 77,000 net jobs were created, which was lower than the 115,000 originally thought to have been added. Despite the slow growth, there have still been six consecutive quarters of job growth, which is positive.

However, without significant and continued growth, total rent growth can take a hit, as well, the report explained. Much of the marked improvements in job growth occurred in areas of the country that still only experienced slight gains in rents. This situation could largely be due to these areas having very affordable housing, which encourages more Americans to buy instead of rent.

The report added that job growth should continue as the year winds down, which could help rents increase as more employment cuts are not expected.

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