The Commercial Real Estate market is showing improvement in most areas, but the slow economic growth has limited companies’ ability to add jobs. The lack of new positions means that organizations are unlikely to expand offices or lease more facilities. In a recent article, Investors.com noted that job creation is an essential part of improving the Commercial Real Estate market, which depends on the health of certain industries and their hiring trends.
Fortunately, the latest employment figures released by the Labor Department show strong gains. During February more than 236,000 jobs were created, helping bring the unemployment rate to its lowest point in four years. The job growth handily beat economists’ expectations and could lead to increased demand for larger offices and more commercial facilities.
Several sectors saw improvement during the start of the year, including manufacturing, construction and technology. Strong growth in these key industries could kick-start faster recovery in other sectors as well, creating the need for additional Commercial Real Estate. The CoStar Commercial Repeat Sale Indices show that the market was beginning to turn around: the total number of transactions increased 22% during 2012 for the highest annual growth in eight years.
Most of the activity last year was a result of investors seeking profitable long-term deals, but it could provide fuel for new construction. Developers are already seeing a rise in hiring within the construction industry. The Labor Department noted that the sector added 48,000 jobs during February. Greater demand for larger facilities could drive up property values in most markets, as vacancies remain low. Commercial property research firm Reis stated that the average office vacancy is 17%, but that figure could drop quickly if hiring continues at a strong pace.
As businesses look to expand their offices or acquire new warehouses and other facilities, building managers will need to ensure they develop strong relationships with existing tenants. This could keep companies from leaving for larger facilities, by helping them to see the value of staying in their existing location. During this process, communication is an essential step and the right tools make it easier to convey important messages and improve relationships.