Office-Using Jobs Decline Over the Past Year

Job Growth in New York Fueled by Modest-Earning Industries

The latest jobs data from the Bureau of Labor Statistics highlights possible future issues for New York’s office and multifamily buildings because of the lack of jobs added in high-earning industries.

Over the past 12 months, private-sector jobs in the New York area have grown by 192,000. The lion’s share of job growth occurred in the education and health sector, with 146,000 jobs added. The leisure and hospitality industry had the second-largest gains with about 60,000 jobs added.

Office-using sectors overall, however, saw job losses. While the financial services sector saw a slight year-over-year gain, the professional and business services sector, along with the information industry, experienced losses totaling more than 30,000 jobs.

This creates a potential issue for the real estate markets in New York. Many of the positions added in the education and health sector were more administrative, while restaurants hired significantly within the leisure and hospitality sector. Typically, these are positions in which incomes are lower than those found within the tech and finance sectors.

Incomes play a major role in a city recently crowned as the most expensive place to live because of its high rents. One-bedrooms in recently built buildings can range from $3,000 to over $6,000, depending on the neighborhood and quality of the building. The lack of jobs added in high-earning industries is a concern to the apartment building owners of the more than 40,000 units under construction.

In addition, not seeing growth among office-using sectors is a troubling sign for office building owners. While availability remains extremely elevated and leasing activity in 2023 is already underperforming, office building owners typically use job growth as a lagging indicator of future demand levels. The data projects another difficult year ahead in 2024, not including the possibility of a mild recession during the fourth quarter.

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