The Urban Land Institute (ULI) released its “2011 Emerging Trends in Real Estate” report last month. The report grades the country’s major metropolitan areas on investment and development opportunities. It is no surprise that very few markets are seen as “markets to watch.” Washington, D.C., New York, San Francisco and Austin top the list as the best markets for commercial/multifamily investment and development. Out of the largest 51 metros in the country, Kansas City ranked in the bottom third. ULI’s report considers Kansas City a “modestly poor” investment prospect and a poor development prospect.
In looking at the prospects for these large metros, it does appear that things fare better in the traditional big cities on the coasts, like New York, Los Angeles, San Francisco-San Jose and Washington, D.C. Texas metros appear to be emerging, as does Denver, but most of the non-coastal metros have poor prospects.
Kansas City has never really been a trendsetter when it comes to real estate prospects, but its poor showing in the ULI report is still somewhat concerning. Markets that are perceived as established or emerging global cities are attracting the real estate development and investment while the secondary markets are being overlooked. If this perception is not changed, the gap between the hot, trendy markets and colder, secondary markets will widen.
Wednesday, November 24, 2010
Monday, November 8, 2010
Are We Turning the Corner in Employment?
October employment figures for the U.S. were released today to overall positive reviews. The most positive feature was the month-to-month increase in employment of 151,000 jobs nationwide. Public-sector jobs lost 8,000, but a stronger-than-expected increase of 159,000 in the private sector made for the first positive growth since May.
The National Bureau of Economic Research declared the 2007-09 recession over 16 months ago. Despite this passage of time, a very sluggish employment market keeps us feeling as if we are still in the recession’s grip. This leads us to wonder, how does this recovery compare to the 2001 recession in terms of employment?
The chart below shows month-over-month change in private employment for the 16-month period after the end of the 2001 recession compared to the 16 months after the 2007-09 recession. (We chose to focus on private employment since temporary census hiring and layoffs skewed the total figures, and growth in employment in the long-term will ultimately depend on private hiring.) Notice that the columns to the left are both negative for many months after recession’s end. This is typical, as employment is a lagging indicator. Employers will typically not start hiring until they are fairly certain the economy is on solid footing.
Somewhat surprising is the difference we see beginning about eight months after the end of each recession. Private employment has grown faster in the 2007-09 recovery than in the 2001 recovery. In the current recovery, monthly private employment change has been positive since December 2009. The 2001 recovery did not exhibit steady private employment growth until almost two years after the recession ended.
There are two important things to keep in mind, however. First, we are celebrating a total employment increase of only 151,000 nationwide. While encouraging, this increase did nothing to the overall unemployment rate, which stayed steady at 9.6 percent. Economists estimate that for the unemployment rate to go down, the U.S. economy would need to add at least 200,000 jobs a month. Second, the 2001 and 2007-09 recessions are very different animals. The 2001 recession saw a loss of almost 3 million private sector jobs, which was tame by comparison to the nearly 8.5 million lost in the 2007-09 recession. So with a much deeper loss in the most recent recession, it stands to reason that the recovery should be a bit more robust.
Regardless, the positive take away from this should be 10 consecutive months of private employment growth nationwide. Granted, the monthly growth figures could be higher, but 10 months still looks like a positive trend.
The National Bureau of Economic Research declared the 2007-09 recession over 16 months ago. Despite this passage of time, a very sluggish employment market keeps us feeling as if we are still in the recession’s grip. This leads us to wonder, how does this recovery compare to the 2001 recession in terms of employment?
The chart below shows month-over-month change in private employment for the 16-month period after the end of the 2001 recession compared to the 16 months after the 2007-09 recession. (We chose to focus on private employment since temporary census hiring and layoffs skewed the total figures, and growth in employment in the long-term will ultimately depend on private hiring.) Notice that the columns to the left are both negative for many months after recession’s end. This is typical, as employment is a lagging indicator. Employers will typically not start hiring until they are fairly certain the economy is on solid footing.
Somewhat surprising is the difference we see beginning about eight months after the end of each recession. Private employment has grown faster in the 2007-09 recovery than in the 2001 recovery. In the current recovery, monthly private employment change has been positive since December 2009. The 2001 recovery did not exhibit steady private employment growth until almost two years after the recession ended.
There are two important things to keep in mind, however. First, we are celebrating a total employment increase of only 151,000 nationwide. While encouraging, this increase did nothing to the overall unemployment rate, which stayed steady at 9.6 percent. Economists estimate that for the unemployment rate to go down, the U.S. economy would need to add at least 200,000 jobs a month. Second, the 2001 and 2007-09 recessions are very different animals. The 2001 recession saw a loss of almost 3 million private sector jobs, which was tame by comparison to the nearly 8.5 million lost in the 2007-09 recession. So with a much deeper loss in the most recent recession, it stands to reason that the recovery should be a bit more robust.
Regardless, the positive take away from this should be 10 consecutive months of private employment growth nationwide. Granted, the monthly growth figures could be higher, but 10 months still looks like a positive trend.
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