Slow job growth stunting real estate market in New Jersey
June 08, 2011
Because demand for commercial real estate is directly tied to job growth, the real estate industry is regularly at the mercy of the economy.
In New Jersey, job growth continues to lag behind other states, which limits the amount of vacancies that can be filled.
The Times of Trenton reports that from February 2008 to January 2010, New Jersey lost nearly 250,000 jobs. From February 2010 to December 2010 it gained a mere 8,200. Such slow employment growth is blocking the growth of the real estate market in the state.
In addition, cash-strapped tenants are taking additional measures to use their space more efficiently. The news source reports that some companies are renewing leases for 20 to 30 percent less space, despite housing the same number of employees.
As a result, landlords have been forced to offer concession packages to secure deals, which hinders overall net-effective rents.
However, InvestingDaily points out that nationwide, there was respectable job growth for three straight months prior to May. Another positive indicator for the industry is the stabilization of half of the prices in the Case-Shiller Price Index for 20 major metropolitan statistical areas.