Commercial Real Estate Drives Jobs
The commercial real estate industry is an important contributor to the nation’s economic body. In 2009, the office building industry contributed $118.4 billion to the U.S. economy. One of the leading employers in the United States is real estate as it alone supported more than a million jobs in 2009. Commercial real estate firms employ building managers, asset managers, custodial staff, security staff, brokers and accountants and retain a myriad of other services through contract, like legal consulting, landscape maintenance and window cleaning to name just a few. In addition, BOMA’s local associations provide work space for an estimated 21 million office jobs.
For each dollar of outlay for office building operations, workers in the U.S. realized an increase of 92 cents in personal earnings; For each dollar of outlay for office building operations, workers in the U.S. increment of 92 cents in personal earnings; For each $1 million of outlay for office building operations, 24.4 jobs were supported nationwide which means total 994,728 jobs across all sectors in addition to the more than one million jobs directly supported by office building operations.
If we do a quick calculation and based on our current job formation trends we will see that, 54,000 jobs added in May, it would take us until 2022 before we get back to baseline employment or the same number of jobs we had in 2007. Now, we know that one month does not make for a “trend” but the implications on real estate are so broad and troubling that it deserves some thought.
If we go into the next recession, which will certainly happen within the next 10 years with an unemployment rate of 8 percent or 9 percent that would mean we could see unemployment rates reach 14 percent to 17 percent based on historical experience. Remember, we enter most of our recessions or downturns with unemployment rates below 4 percent, which seems very unlikely for the next one and real estate market is the only sector which can help us in that situation so lots of potential is there in this market.