WHAT DO NEW LABOR MARKET TRENDS MEAN FOR CRE INVESTORS?
Labor Markets Strength Continues Despite Elevated Rates
- Warehousing employment has skyrocketed since 2019, growing over 35% from the prior peak and aiding industrial absorption
- Professional and Business Services job totals have also exceeded prior peaks, helping office absorption return to positive territory at the close of 2023
Economic Growth Both a Headwind and Tailwind for CRE
- Strong employment growth is bolstering economic activity and boosting space demand across asset type
- At the same time, a strong labor market may cause the Fed to be more cautious when cutting rates throughout the year
Inflation Headed Towards Federal Reserve Target of 2%
- Inflation is on the downward trajectory, and is below the Fed target level when looking at 3-month and 6-month annualized rates
- If the Fed can get inflation under control while labor markets continue to grow, the central bank is unlikely to cuts rate quickly
*Sources: Marcus & Millichap Research Services, BLS
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