The Azucena Take: Job Market Recovery and Commercial Real Estate
The recovery is still ongoing but overall the economy has almost regained all the jobs lost during the pandemic. However, the recovery has not been shared equally as most metros have still not fully recovered. Meanwhile, only five areas have added more jobs than they had at the start of 2020.
As of October 2021; 5.8 million jobs have been added to the economy, bringing the total number of jobs recovered up to +18.2 million. Even though it falls short compared to 22.4 million jobs lost, it's only low by 2.8%. On the national level, the recovery has been uneven with the majority of metros still in the negatives.
Markets that were hit the hardest during the pandemic, had the most strict lockdowns, or were dependent on tourism have slowly recovered. At the other end of the spectrum are metros that were already growing have added more jobs than they had before the pandemic. It should be noted that all these metros are seeing new jobs added, but the market is working based on the conditions of the community.
The markets with the slowest recovery have seen jobs return but it has been stiffened for a number of reasons. The biggest factors have been either having a tourist economy or stricter restrictions. The five slowest markets are:
43. New York (-10.1%)
42. Las Vegas (-7.5%)
41. Los Angeles (-7.4%)
40. Orlando (-6.7%)
39. Bay Area (-6.6%)
Examining the job market of the Bay Area, it's currently -6.6% below pre-pandemic levels. During the pandemic, it lost 537K jobs but it has gained 56% of the jobs lost while adding 15.5K new jobs each month. While the economic restrictions have slowed the job growth, Bay Area counties have the highest vaccination and the lowest hospitalization rates.
On the other end of the spectrum are the markets with the fastest recovery. These are the only metros with job growth that is in the positives. The five fastest markets are:
1. Salt Lake City (+3.4%)
2. Austin (+2.1%)
3. Jacksonville (+1.1%)
4. Tampa (+0.8%)
5. Phoenix (+0.6%)
For investors; these markets present a different opportunity regardless of how the numbers look. The Bay Area job growth might be slow but the average rent has returned to pre-pandemic levels in most cities. Demand for some types of offices is high in cities like Phoenix or Austin. Industrial space has always been in demand since 2020.
The overall takeaway is that smart investors know how to capitalize in any market regardless of the challenges.