Five up and coming real estate markets for 2016JLL
Demand for office space is rising in five up and coming real estate markets, where costs are affordable and talent is strong. See more at http://bit.ly/1RJlmOU
Construction activity is shifting nationwide as manufacturing and retail companies make efforts to modernize, create more just-in-time shipping locations and link operations digitally.
February 2016 U.S. employment update and outlook JLL
The labor market recorded a soft opening to 2016, adding only 151,000 new jobs, although unemployment fell below 5.0 percent for the first time since 2008.
Global economic struggles are dampening the US construction recovery. Low growth abroad has reduced investment and consumer spending domestically. While US GDP growth remains steady, construction lags the broader economy and may slow in response to global issues like low commodity prices and China's economic decline. Rising costs also challenge builders as wages and materials prices increase. First quarter construction starts declined from 2015 levels, and some sectors like office have seen significant drops, indicating activity is beginning to flatten due to cautious spending globally. Infrastructure remains a bright spot with increased transportation spending.
With the economy growing at its fastest pace in the current cycle, employers across industries are adding jobs, especially in urban and dense markets where talent is migrating. As a result, expansionary activity remained the dominant driver of leasing in the third quarter, accounting for 57.9 percent of lease transactions.
Construction starts were up in 2014, driven largely by the office and industrial sectors in energy-producing markets, as well as traditional office markets like New York. Even as demand explodes, though, the cost to build is higher than ever thanks to the continued increase in labor and materials costs.
Demand for large retail space has declined as more consumers shop online. Much of the growth in the industrial sector, in fact, is to meet growing demand for shipping and warehousing space.
The Construction Backlog Index is high, indicating that 2015 will be a big year for construction. Industry unemployment rates remain high, so there is large potential employment pool to meet demand. In addition, we expect materials costs to drop.
Due to dropping oil prices, one sector that may see a construction decline in 2015 is energy. This will greatly impact Houston in particular, as it was a hub of construction activity last year.
In late 2014, oil prices experienced significant declines due to oversaturated supply and a slowdown in global demand. Prices have since stabilized but at depressed levels. Materials prices were projected to drop in correlation with oil, but high demand for most major construction inputs has kept prices up overall.
Low gas prices typically drive an uptick in demand for retail, e-commerce, and industrial real estate. However, shipping costs remain high due to a decline in available labor, negating much of the oil price savings.
In the office market, the development pipeline continues to expand alongside rents, which increased 3.1 percent this quarter. U.S. markets are set to deliver more than 80 million square feet currently under development. Energy-heavy markets such as Houston are exceptions to this trend, as declining demand stifles the need for new space.
Five up and coming real estate markets for 2016JLL
Demand for office space is rising in five up and coming real estate markets, where costs are affordable and talent is strong. See more at http://bit.ly/1RJlmOU
Construction activity is shifting nationwide as manufacturing and retail companies make efforts to modernize, create more just-in-time shipping locations and link operations digitally.
February 2016 U.S. employment update and outlook JLL
The labor market recorded a soft opening to 2016, adding only 151,000 new jobs, although unemployment fell below 5.0 percent for the first time since 2008.
Global economic struggles are dampening the US construction recovery. Low growth abroad has reduced investment and consumer spending domestically. While US GDP growth remains steady, construction lags the broader economy and may slow in response to global issues like low commodity prices and China's economic decline. Rising costs also challenge builders as wages and materials prices increase. First quarter construction starts declined from 2015 levels, and some sectors like office have seen significant drops, indicating activity is beginning to flatten due to cautious spending globally. Infrastructure remains a bright spot with increased transportation spending.
With the economy growing at its fastest pace in the current cycle, employers across industries are adding jobs, especially in urban and dense markets where talent is migrating. As a result, expansionary activity remained the dominant driver of leasing in the third quarter, accounting for 57.9 percent of lease transactions.
Construction starts were up in 2014, driven largely by the office and industrial sectors in energy-producing markets, as well as traditional office markets like New York. Even as demand explodes, though, the cost to build is higher than ever thanks to the continued increase in labor and materials costs.
Demand for large retail space has declined as more consumers shop online. Much of the growth in the industrial sector, in fact, is to meet growing demand for shipping and warehousing space.
The Construction Backlog Index is high, indicating that 2015 will be a big year for construction. Industry unemployment rates remain high, so there is large potential employment pool to meet demand. In addition, we expect materials costs to drop.
Due to dropping oil prices, one sector that may see a construction decline in 2015 is energy. This will greatly impact Houston in particular, as it was a hub of construction activity last year.
In late 2014, oil prices experienced significant declines due to oversaturated supply and a slowdown in global demand. Prices have since stabilized but at depressed levels. Materials prices were projected to drop in correlation with oil, but high demand for most major construction inputs has kept prices up overall.
Low gas prices typically drive an uptick in demand for retail, e-commerce, and industrial real estate. However, shipping costs remain high due to a decline in available labor, negating much of the oil price savings.
In the office market, the development pipeline continues to expand alongside rents, which increased 3.1 percent this quarter. U.S. markets are set to deliver more than 80 million square feet currently under development. Energy-heavy markets such as Houston are exceptions to this trend, as declining demand stifles the need for new space.
JLL’s Office Skyline focuses on the top tier of the office market, looking at some of the most iconic and highest-rent properties within CBDs and urban cores. Take a look at these five 2016 U.S. office market trends.
U.S. employment showed a healthy return to growth in February with 242,000 net new jobs. Unemployment remained at 4.9 percent, but total unemployment dropped to just 9.7 percent—the lowest rate since before the recession.
U.S. office market trends and outlook (Q1 2016) JLL
Outlooks leading into the new year called for further expansion across U.S. office markets. However, stock market tumbles driven by a weakening China and depleted oil prices shifted sentiment from that of a growth perspective to one of increased caution. Despite this, economic and real estate fundamentals remain primarily landlord-favorable through the remainder of 2016.
Learn more, and see market-by-market comparisons, at http://bit.ly/1qrZZGm
Construction costs continue to grow nationwide, and many landlords are looking to redevelop existing stock in major markets.
Tenant improvements (TIs) are also gaining momentum, and office landlords are competing for by offering more attractive TI packages. These offerings allow tenants to customize interiors without paying for a full redesign out of pocket, and are a key piece of lease negotiations. The average TI allowance nationwide is $30.00 per square foot, and just over $50.00 per square foot in CBDs.
Top tech cities: Exploring demand, leasing growth, VC funding and more JLL
See what’s going on in America’s top tech markets, and some key trends we’re seeing nationwide. In this presentation, we explore tech leasing growth, tech company demand in key markets and submarkets (and its impact on office rental rates), where to find the best opportunity for VC funding and more.
Visit http://bit.ly/1Sg3RSN for more on what’s happening in today’s tech markets nationwide.
1) Downtown Detroit is experiencing a renaissance bolstered by large lease announcements like Fifth Third Bank signing a lease for 62,000 square feet to serve as its regional headquarters.
2) Office employment in Detroit grew in 2014, led by gains in the professional and business services sector, though growth tapered somewhat. Unemployment decreased to 6.3%.
3) Landlords in Detroit have begun pushing rents higher due to declining vacancy rates and steady demand gains in recent years. Class A asking rents were up 2.9% year-over-year in Q1 2015.
Minneapolis–St. Paul Employment Update | September 2016Carolyn Bates
Minneapolis-St. Paul has the second-lowest unemployment rate in the nation among all large metros, according to the most recent BLS estimates.
Financial services has reached its largest-ever employment count in MSP. The sector has seen steady gains since 2010 and even surpassed pre-Recession highs earlier this year. And once again, MSP achieved record-breaking employment totals for professional and business services, a fundamental component to the metro’s economic growth. Nearly 6,000 jobs have been added in the industry year-over-year.
Nationwide, 151,000 net new jobs were created in August, falling below the 250,000+ monthly additions over the previous two months. Although still at average levels of growth, August demonstrated the continued volatility of the labor market in 2016. Unemployment remained stable at 4.9 percent as growth in the workforce has aligned with employment gains. The Federal Reserve is likely to hold off on the next rate hike due to inconsistent monthly additions and weaker-than-expected wage growth.
Colliers North American Office Highlights 2Q 2013Coy Davidson
The document provides a summary of key office market indicators for North America in Q2 2013. Some key points:
- The overall North American vacancy rate decreased slightly to 13.86% due to declines in the US rate, while the Canadian rate increased slightly.
- Net absorption surged to 15.5 million square feet, an increase from the previous quarter, driven by an improving US economy despite headwinds.
- Construction activity remains low compared to historical levels and concentrated in strong demand markets, which will support the recovery.
- Transaction volume increased 36% year-over-year, with investors taking on more risk amid global economic weakness.
Minneapolis–St. Employment Update | March 2016Carolyn Bates
Minneapolis-St. Paul’s unemployment rose to 3.9 percent, according to the most recent estimates available from the BLS. Although still 100 basis points lower than the national rate, this month is the first time since July 2015 that the metro unemployment rate is higher than the state of Minnesota’s.
Industrial sectors were responsible for 26.7 percent of the 12-month total employment growth, outperforming office-using sectors which saw 19.6 percent of total growth. Trade, transportation, and utilities added 3,200 jobs year-over-year and drove the bulk of industrial growth throughout 2015.
Although national year-to-date figures are down compared to 2015, January saw significant upward revisions to 172,000 jobs, improving the year’s initial performance. Despite global tensions and economic shifts, the U.S. economy seems to be holding its own, although certain sectors such as energy and trade could be impacted by fluctuations in domestic and international demand.
The quarterly economic indicators report for Northeast Ohio in Q4 2010 found signs of gradual economic improvement. Manufacturing employment increased by almost 10,000 jobs and services employment increased by 6,000 jobs compared to Q4 2009. The unemployment rate dropped nearly 1% to 9.3% and initial unemployment claims decreased from 7,100 to 5,600 between Q4 2009 and Q4 2010. Republican John Kasich was elected governor of Ohio and plans to establish JobsOhio, a new not-for-profit corporation, to direct economic development and job creation efforts in the state.
The document summarizes North American office market indicators for Q3 2014. Vacancy rates declined slightly in both the US and Canada while absorption increased. Job growth drove office demand in both countries, leading to a broadening economic recovery. Office-using employment increased more than total employment, with growth seen across more industry sectors and geographic regions. Transaction volume was also up, reflecting continued strong investor demand.
U.S. office market statistics (Q4 2014) and 2015 outlook JLL
Now at its strongest point in the recovery, the economy grew by nearly 3.0 million jobs in 2014, pushing unemployment to its lowest level since the third quarter of 2008. As a result, markets across the country recorded expansionary activity as corporate confidence grew along with demand for office space. Annual net absorption totaled 54.7 million square feet driving vacancy to 15.6 percent—its lowest point since 2008—a trend expected to continue over the next 24 months.
While challenges exist ahead, including historically low labor force participation and the recent fall in oil prices, forecasts for 2015 and 2016 across the U.S. project the highest growth in more than a decade.
Learn more and see market-by-market data at http://bit.ly/1yy1zss
Presentation given by Brookings' Marek Gootman at a workshop between U.S. and Australian leaders entitled "Building and Sustaining Globally Competitive Regions."
Q1 2015 U.S. office market statistics, trends and outlookJLL
Though vacancy remained unchanged at 15.6 percent in Q1, as the year continues we expect it to drop below 15 percent for the first time in a decade. Corporate growth is driving expansionary activity, and tenants are thus faced with increasingly challenging market conditions. Currently more than one-third of all markets are favorable to landlords, and that’s expected to increase to three-quarters. With this leverage, landlords will continue driving rents upward, potentially surpassing a 5.0-percent increase by year end.
Learn more and see market-by-market data at http://bit.ly/1Cfucrv
The document discusses global cities and their competitiveness. It identifies seven types of global cities based on their population, GDP, talent, traded sectors, innovation, infrastructure, industry characteristics, and economic characteristics. The first type discussed are "Global Giants," which are the largest global cities by population and GDP that play a dominant role in the global economy.
U.S. law firm revenues are up, but so are office rents.JLL
AmLaw 100 law firm revenue reached a record $81 billion in 2014 and continues to grow at around 4.5% annually. Profits per partner are rising with 16% of AmLaw 100 firms now making over $2.5 million per partner. Office vacancy rates are tightening as CBD Class A vacancy fell to 11.1% in Q2 2015 with some cities like Pittsburgh and Portland below 7%. While more new Class A office space totaling 38.3 million square feet is under construction, a third more than last year, the preleasing rate of 38.1% provides some relief to the tightening market.
St. Louis unemployment held steady at 5.6 percent this month as the number of job seekers kept pace with employment. The number of employed workers continues to be at post-recession highs.
This benchmarking study, developed by the Brookings Metropolitan Policy Program, provides the Greater Charlotte region with a framework and data to better understand its performance and position in the global economy, offering information and insights to help leaders more actively shape the region’s economic strategy.
Construction activity and tenant improvement allowances are growing as the US economic recovery continues. As more new construction comes online, landlords are offering more attractive tenant improvement packages to attract tenants, customizing spaces up to $50 per square foot in major city centers. Construction costs remain high but are growing more slowly, driven by increases in materials like gypsum board and lumber. Overall construction starts in Q2 2015 reached their highest point since before the recession.
CannonDesign’s Cost Estimating team offers clients an in-depth understanding of initial construction cost, life cycle cost, schedule and construction delivery strategies to complement the firm’s design talent.
JLL’s Office Skyline focuses on the top tier of the office market, looking at some of the most iconic and highest-rent properties within CBDs and urban cores. Take a look at these five 2016 U.S. office market trends.
U.S. employment showed a healthy return to growth in February with 242,000 net new jobs. Unemployment remained at 4.9 percent, but total unemployment dropped to just 9.7 percent—the lowest rate since before the recession.
U.S. office market trends and outlook (Q1 2016) JLL
Outlooks leading into the new year called for further expansion across U.S. office markets. However, stock market tumbles driven by a weakening China and depleted oil prices shifted sentiment from that of a growth perspective to one of increased caution. Despite this, economic and real estate fundamentals remain primarily landlord-favorable through the remainder of 2016.
Learn more, and see market-by-market comparisons, at http://bit.ly/1qrZZGm
Construction costs continue to grow nationwide, and many landlords are looking to redevelop existing stock in major markets.
Tenant improvements (TIs) are also gaining momentum, and office landlords are competing for by offering more attractive TI packages. These offerings allow tenants to customize interiors without paying for a full redesign out of pocket, and are a key piece of lease negotiations. The average TI allowance nationwide is $30.00 per square foot, and just over $50.00 per square foot in CBDs.
Top tech cities: Exploring demand, leasing growth, VC funding and more JLL
See what’s going on in America’s top tech markets, and some key trends we’re seeing nationwide. In this presentation, we explore tech leasing growth, tech company demand in key markets and submarkets (and its impact on office rental rates), where to find the best opportunity for VC funding and more.
Visit http://bit.ly/1Sg3RSN for more on what’s happening in today’s tech markets nationwide.
1) Downtown Detroit is experiencing a renaissance bolstered by large lease announcements like Fifth Third Bank signing a lease for 62,000 square feet to serve as its regional headquarters.
2) Office employment in Detroit grew in 2014, led by gains in the professional and business services sector, though growth tapered somewhat. Unemployment decreased to 6.3%.
3) Landlords in Detroit have begun pushing rents higher due to declining vacancy rates and steady demand gains in recent years. Class A asking rents were up 2.9% year-over-year in Q1 2015.
Minneapolis–St. Paul Employment Update | September 2016Carolyn Bates
Minneapolis-St. Paul has the second-lowest unemployment rate in the nation among all large metros, according to the most recent BLS estimates.
Financial services has reached its largest-ever employment count in MSP. The sector has seen steady gains since 2010 and even surpassed pre-Recession highs earlier this year. And once again, MSP achieved record-breaking employment totals for professional and business services, a fundamental component to the metro’s economic growth. Nearly 6,000 jobs have been added in the industry year-over-year.
Nationwide, 151,000 net new jobs were created in August, falling below the 250,000+ monthly additions over the previous two months. Although still at average levels of growth, August demonstrated the continued volatility of the labor market in 2016. Unemployment remained stable at 4.9 percent as growth in the workforce has aligned with employment gains. The Federal Reserve is likely to hold off on the next rate hike due to inconsistent monthly additions and weaker-than-expected wage growth.
Colliers North American Office Highlights 2Q 2013Coy Davidson
The document provides a summary of key office market indicators for North America in Q2 2013. Some key points:
- The overall North American vacancy rate decreased slightly to 13.86% due to declines in the US rate, while the Canadian rate increased slightly.
- Net absorption surged to 15.5 million square feet, an increase from the previous quarter, driven by an improving US economy despite headwinds.
- Construction activity remains low compared to historical levels and concentrated in strong demand markets, which will support the recovery.
- Transaction volume increased 36% year-over-year, with investors taking on more risk amid global economic weakness.
Minneapolis–St. Employment Update | March 2016Carolyn Bates
Minneapolis-St. Paul’s unemployment rose to 3.9 percent, according to the most recent estimates available from the BLS. Although still 100 basis points lower than the national rate, this month is the first time since July 2015 that the metro unemployment rate is higher than the state of Minnesota’s.
Industrial sectors were responsible for 26.7 percent of the 12-month total employment growth, outperforming office-using sectors which saw 19.6 percent of total growth. Trade, transportation, and utilities added 3,200 jobs year-over-year and drove the bulk of industrial growth throughout 2015.
Although national year-to-date figures are down compared to 2015, January saw significant upward revisions to 172,000 jobs, improving the year’s initial performance. Despite global tensions and economic shifts, the U.S. economy seems to be holding its own, although certain sectors such as energy and trade could be impacted by fluctuations in domestic and international demand.
The quarterly economic indicators report for Northeast Ohio in Q4 2010 found signs of gradual economic improvement. Manufacturing employment increased by almost 10,000 jobs and services employment increased by 6,000 jobs compared to Q4 2009. The unemployment rate dropped nearly 1% to 9.3% and initial unemployment claims decreased from 7,100 to 5,600 between Q4 2009 and Q4 2010. Republican John Kasich was elected governor of Ohio and plans to establish JobsOhio, a new not-for-profit corporation, to direct economic development and job creation efforts in the state.
The document summarizes North American office market indicators for Q3 2014. Vacancy rates declined slightly in both the US and Canada while absorption increased. Job growth drove office demand in both countries, leading to a broadening economic recovery. Office-using employment increased more than total employment, with growth seen across more industry sectors and geographic regions. Transaction volume was also up, reflecting continued strong investor demand.
U.S. office market statistics (Q4 2014) and 2015 outlook JLL
Now at its strongest point in the recovery, the economy grew by nearly 3.0 million jobs in 2014, pushing unemployment to its lowest level since the third quarter of 2008. As a result, markets across the country recorded expansionary activity as corporate confidence grew along with demand for office space. Annual net absorption totaled 54.7 million square feet driving vacancy to 15.6 percent—its lowest point since 2008—a trend expected to continue over the next 24 months.
While challenges exist ahead, including historically low labor force participation and the recent fall in oil prices, forecasts for 2015 and 2016 across the U.S. project the highest growth in more than a decade.
Learn more and see market-by-market data at http://bit.ly/1yy1zss
Presentation given by Brookings' Marek Gootman at a workshop between U.S. and Australian leaders entitled "Building and Sustaining Globally Competitive Regions."
Q1 2015 U.S. office market statistics, trends and outlookJLL
Though vacancy remained unchanged at 15.6 percent in Q1, as the year continues we expect it to drop below 15 percent for the first time in a decade. Corporate growth is driving expansionary activity, and tenants are thus faced with increasingly challenging market conditions. Currently more than one-third of all markets are favorable to landlords, and that’s expected to increase to three-quarters. With this leverage, landlords will continue driving rents upward, potentially surpassing a 5.0-percent increase by year end.
Learn more and see market-by-market data at http://bit.ly/1Cfucrv
The document discusses global cities and their competitiveness. It identifies seven types of global cities based on their population, GDP, talent, traded sectors, innovation, infrastructure, industry characteristics, and economic characteristics. The first type discussed are "Global Giants," which are the largest global cities by population and GDP that play a dominant role in the global economy.
U.S. law firm revenues are up, but so are office rents.JLL
AmLaw 100 law firm revenue reached a record $81 billion in 2014 and continues to grow at around 4.5% annually. Profits per partner are rising with 16% of AmLaw 100 firms now making over $2.5 million per partner. Office vacancy rates are tightening as CBD Class A vacancy fell to 11.1% in Q2 2015 with some cities like Pittsburgh and Portland below 7%. While more new Class A office space totaling 38.3 million square feet is under construction, a third more than last year, the preleasing rate of 38.1% provides some relief to the tightening market.
St. Louis unemployment held steady at 5.6 percent this month as the number of job seekers kept pace with employment. The number of employed workers continues to be at post-recession highs.
This benchmarking study, developed by the Brookings Metropolitan Policy Program, provides the Greater Charlotte region with a framework and data to better understand its performance and position in the global economy, offering information and insights to help leaders more actively shape the region’s economic strategy.
Construction activity and tenant improvement allowances are growing as the US economic recovery continues. As more new construction comes online, landlords are offering more attractive tenant improvement packages to attract tenants, customizing spaces up to $50 per square foot in major city centers. Construction costs remain high but are growing more slowly, driven by increases in materials like gypsum board and lumber. Overall construction starts in Q2 2015 reached their highest point since before the recession.
CannonDesign’s Cost Estimating team offers clients an in-depth understanding of initial construction cost, life cycle cost, schedule and construction delivery strategies to complement the firm’s design talent.
Mercer Capital's Value Focus: Construction Industry | Q2 2015Mercer Capital
Mercer Capital’s Construction Industry newsletter is a quarterly publication providing perspective on valuation issues pertinent to the construction industry, including residential, commercial, civil, paving, concrete, and more. Each issue includes a segment focus, market overview, mergers and acquisitions review, and more.
RECI July 2016 Metro Chicago Core MOB SnapshotThomas Amato
The document provides an analysis of the Metro Chicago medical office building (MOB) market for the second quarter of 2016. It finds that while job growth and demand for healthcare services remains strong, the MOB market is showing signs of slowing absorption due to a large single vacancy. Specifically, vacancy rose to 13.7% due to the vacancy of a 153,000 square foot building, while average asking rents continued to increase. The outlook remains positive, with expectations that vacancy will decline over the long term as demand and MOB job growth remain strong, fueling need for additional space.
Mercer Capital's Value Focus: Construction and Building Materials | Q2 2018 |...Mercer Capital
Mercer Capital's Construction Industry newsletter provides a broad range of specialized valuation and transaction advisory services to the construction industry, including residential, commercial, civil, paving, concrete, and more. Each issue includes a segment focus, market overview, mergers and acquisitions review, and more.
The document provides an overview of the US industrial real estate market in Q1 2016. Some key points:
- Net absorption was 57.9 million square feet, an increase over Q1 2015. Vacancy fell to 6.1%, its lowest level in 30 years.
- 22 markets saw over 1 million square feet of positive net absorption. Strong employment and consumer spending are driving demand.
- Online retail sales continue to grow much faster than overall retail and support additional industrial space needs. Speculative construction is increasing but remains controlled.
- Rents increased 3.8% year-over-year nationally, with over 20% of markets seeing double-digit rent growth. Fundamentals remain strong across the industrial
December 2015 U.S. employment update and outlookJLL
Employers added 211,000 net new jobs in November, but the unemployment rate remained at 5 percent. The Federal Reserve's anticipated interest rate hike is now very likely.
The document provides an analysis of the Q4 2019 industrial real estate market in St. Louis. It finds that employment in the industrial sector grew 2.4% year-over-year, driven by growth in the construction sector. Absorption topped 4 million square feet for the fourth straight year thanks largely to expansions by World Wide Technology. Vacancy rates rose above 5% as several new speculative buildings delivered vacant space to the market. Leasing activity continued to be dominated by smaller tenants under 100,000 square feet.
U.S. employment update and outlook: December 2014JLL
November gain of 321,000 jobs confirms the strength of the recovery
The U.S. economy saw the growth of an additional 321,000 net new jobs in November. With revisions of earlier months' data, makes November the ninth consecutive month with gains surpassing 200,000 jobs.
Unemployment remained steady from the previous month at 5.8 percent. Total unemployment—which includes detached workers—dropped by 10 basis points to a recovery low of 11.4 percent, as the number of marginally detached workers slowly declines.
See more economic, office and real estate research at http://bit.ly/1s2tk4M
The document summarizes the May 2015 employment situation in Chicago and the United States. It states that the unemployment rate declined in Chicago to 5.9% due to hiring outpacing individuals leaving the workforce. Key sectors driving expansion in Chicago include construction, trade/transportation/utilities, professional services, and leisure/hospitality. Total US nonfarm employment increased by 280,000 jobs in May, while the national unemployment rate rose slightly to 5.5% and wages increased 2.3% annually.
Non-farm employment across the Baltimore metro area totaled nearly 1.4 million, which is up 2.5 percent compared to the previous year and 4.4 percent higher than the previous cyclical peak reached in late 2007.
The construction industry is seeing steady growth despite of the labor shortage for skilled construction workers. While growth looks good now, not solving for the labor challenges could be a problem that slows the industry down.
2017 santa clara county construction forecastMichael Miller
The document provides an overview of construction forecasts for Santa Clara County in 2017. It summarizes national and state construction statistics and trends. For Santa Clara County, it forecasts continued growth in total construction value, with increases in residential, commercial, and institutional building starts. It also notes high construction costs in the county compared to national averages and low unemployment rates in the construction industry locally.
November 2015 U.S. employment update and outlookJLL
October saw the labor market return to form after a two-month slowdown, adding 271,000 net new jobs across industries, in turn bringing down unemployment to 5 percent, the lowest rate seen during the recovery so far.
Notable over the past few months has been a rise in wages in an otherwise low-inflation environment, which will boost the personal expenditures component of GDP in the coming quarters.
October 2015 U.S. employment update and outlookJLL
September’s jobs figures were below expectations, with only 142,000 jobs added and August downwardly revised to 136,000. Although some of this may be attributed to seasonality, strong external fundamentals signal that slower figures may be the result of an impending talent crunch.
The St. Louis industrial market had more then three million square feet of absorption in the third quarter. Find out more in our latest Industrial Outlook.
U.S. employment update and outlook: January 2015 JLL
The U.S. labor market added 252,000 net new jobs in December, bringing total job gains in 2014 to 3.0 million. The unemployment rate declined to 5.6% as consistent job growth outpaced labor force growth. Several industries like construction, education, health and leisure saw strong job additions that offset slower growth in the office-using sector. Overall the report indicates the labor market recovery continued in December with widespread job gains across most states and metropolitan areas.
Mercer Capital's Value Focus: Construction and Building Materials | Q3 2018 |...Mercer Capital
Mercer Capital's Construction Industry newsletter provides a broad range of specialized valuation and transaction advisory services to the construction industry, including residential, commercial, civil, paving, concrete, and more. Each issue includes a segment focus, market overview, mergers and acquisitions review, and more.
Similar to U.S. construction trends and outlook (Q4 2015) (20)
September 2018 U.S. employment update and outlookJLL
With 201,000 net new jobs, August 2018 rebounded after a slower July 2018, aided by growth in a variety of sectors, most notably a resurgence in transportation, warehousing and wholesale trade.
The July 2018 U.S. labor market report showed:
1) The economy added 157,000 new jobs in July, a slower rate than recent months but still positive overall.
2) The unemployment rate dropped to 3.9% as more new entrants found jobs.
3) Wage growth remains around 2.7%, not keeping up with inflation near 3%, indicating continued worker confidence but challenges for employers to expand headcounts.
With 213,000 net new jobs added in June, the labor market’s expansion now totals 92 consecutive month, placing it among the longest periods of post-war expansion.
Remarkably, gains have been found largely across industries, although retail trade posted contraction of 21,600 jobs after showing signs of recovery earlier in the year.
A slight boost to the participation rate pushed unemployment up 20 basis points to 4.0 percent, however.
May’s 223,000 net new jobs represented the 91st consecutive month of growth, further extending an already unprecedented expansionary cycle. Since early 2017, the change in employment compared to the previous cycle has been higher than growth in the civilian labor force, leading to rapid declines in unemployment, which now stands at just 3.8%. With the economy showing no meaningful signs of slowdown and inflation rising under the pressure of sustained output growth, the Federal Reserve is on track to continue its program of tightening over the coming quarters.
With 164,000 net new jobs, employment growth in April 2018 maintained the year's solid pace. Growth was spread across industries, although professional services emerged as a clear leader during the month, accounting for roughly one-third of all gains.
A slight drop to the civilian labor force spread to both employment and unemployment figures, driving down unemployment to a new low of 3.9 percent.
Debt funds are increasingly competing with traditional lenders like banks and life companies when it comes to placing debt in commercial real estate deals. But just how prevalent are these relative newcomers? Take a look at the SlideShare to see how debt funds are claiming their slice of the lending pie.
JLL Retail Research looks at coming closures, the impact of e-commerce on brick and mortar stores, how the store experience is changing and which retailers are actually expanding operations despite the current climate (as of March 2018).
The 313,000 net new jobs created in February represented the highest monthly level of job creation since mid-2016.
Growth was found throughout the labor market, with goods-producing sectors such as construction, retail and manufacturing in particular holding firm and, in the case of retail trade, rebounding after months of losses.
Gains were also possible as a result of a sharp increase in labor-force expansion, which boosted labor force participation and kept unemployment at 4.1 percent rather than declining further.
February 2018 U.S. employment update and outlookJLL
January 2018 saw 200,000 net new jobs created, with unemployment once again stable at 4.1 percent. Job growth continues in line with expansion of the broader labor force, even as slack diminishes.
January 2018 U.S. employment update and outlookJLL
December 2017 saw 148,000 net new jobs added to the national labor market, below consensus figures but still healthy. Unemployment held steady at 4.1 percent and is expected to stay flat or decline in the absence of meaningful improvements in labor force participation or accelerated expansion of the labor force. A combination of widespread positive fundamentals, from consumer spending to business investment, is keeping the outlook for 2018 optimistic.
December 2017 U.S. employment update and outlookJLL
Monthly employment growth surpassed the 200,000-mark for a second consecutive month in November, adding 228,000 jobs and countering hurricane-related pauses earlier in the year. Importantly, job growth is still taking place faster than the labor force is capable of expanding and with the participation rate not increasing, placing pressure on employers in primary, secondary and tertiary markets to expand their headcount.
The document discusses recent trends in the London office market. It notes that speculative development completions have increased since the early 1990s. Leasing market indicators remain strong with high take-up and low vacancy rates. Occupier demand is driven by factors like health, flexibility, and technology. Office investment in central London reached £18 billion in 2017, with over a third of capital coming from overseas, especially Asia and the Middle East. While some forecasts are pessimistic due to Brexit, the document argues the leasing market fundamentals remain sound and submarket performance will continue to vary.
November 2017 U.S. employment update and outlookJLL
October saw 261,000 net new jobs added, a rebound from a weak September hit with two hurricanes and an initially negative employment growth figure. Revisions brought September back to positive territory, however, extending the expansionary streak to 84 consecutive months of growth. Although unemployment has fallen to 4.1 percent, wage growth has yet to meaningfully improve, remaining below the 3.0-percent threshold and with most industries seeing a slowdown the rate of annual earnings growth.
The London leasing market has so far remained resilient to slower economic growth. Q3 take-up hit 3.3 million sq ft, bringing the year to date total to 8.1 million sq ft, 18% up on the 2016 total to end Q3, and comfortably ahead of long-term average levels. The rise of flexible offices has been a key feature, accounting for 17% of take-up in 2017.
Three years from the start of the oil slump, employment and commercial real estate fundamentals are finally showing incremental improvement across North America’s energy markets. Examine the key themes in today’s industry and explores challenges and opportunities in seven energy-centric cities across the U.S. and Canada.
JLL Retail: Store closure summary, October 2017 JLL
JLL Retail Research looks at coming closures, the impact of e-commerce on brick and mortar stores, how the store experience is changing and which retailers are actually expanding operations despite the current climate (as of October 2017).
Vacancy at the top of the market is slowly moving upward, although levels remain below historic norms. New supply and givebacks upon relocation due to efficiency have begun to and will continue to result in rising vacancy.
October 2017 U.S. employment update and outlookJLL
After more than 80 consecutive months of growth, the U.S. labor market saw its first contraction, losing 33,000 jobs in net terms, largely a result of Hurricanes Harvey and Irma. The overwhelming majority of losses were concentrated in the leisure and hospitality sector, particularly in Florida (Puerto Rico is not counted in monthly figures), further exacerbating this contraction.
JLL Retail: Store closure summary, September 2017 JLL
Toys R Us filed for bankruptcy and plans to close underperforming stores and transform others. Perfumania also filed for bankruptcy and will close some stores. Several retailers have credit ratings below satisfactory and future closures may be imminent. More than 5,300 store closures are expected by the end of 2017, with apparel and electronics stores making up almost half. While many stores are closing, some retailers like Lidl and Aldi are expanding aggressively.
September 2017 U.S. employment update and outlookJLL
The national labor market saw 156,000 net new jobs added in August, a solid figure but below expectations. Additionally, previous months registered downward revisions to job growth, muting some of the rebound witnessed during the summer. Continuing a trend that has intensified in recent quarters, a lack of skilled workers combined with minimal unemployment and external difficulties such as housing affordability in tech hubs have significantly slowed tech growth over the year. Even with inconsistent inflation, sustained job growth could likely encourage another Federal Reserve rate hike in the near term.
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1. Construction activity will grow
in 2016, but at a slower rate
United States
Construction Perspective
Q4 2015
2. 2015 was a banner year for post-recession construction activity:
• Office space under construction peaked at 92.8 m.s.f.
• Industrial construction was the shining star as consumer confidence grew.
• Construction costs increased in primary office markets, driven by skyrocketing
labor costs, which motivated growth in secondary markets.
While construction activity will continue to grow, in 2016 the ascent will
be slower as executives think strategically about in which sectors and
markets to invest:
• China’s economic struggles will start to affect the United States economy-
though the construction industry lags the economy by a year, so the full effects
of the lag will not reach the construction market until 2017 or 2018.
• Consumer demand will start to decline, influencing retail and manufacturing
demand.
• Labor shortages in the construction industry, along with skyrocketing sheet
glass prices, will stoke fears of rising costs, shaking business confidence in
some sectors.
3. Key construction markets
3
Source: JLL Research
The impact of the decline in energy prices on construction began to rear its head at the end of 2015, as office
construction activity in energy markets like Houston dropped drastically, while sublease space reached record
highs. With energy prices projected to stay low in 2016, construction will continue to stall. However, experts
predict oil prices will rise again by 2017, which will restart the cycle.
The South has become the new frontier for construction activity. In 2015, thanks to low labor and land costs,
many large companies moved there to build new manufacturing and office spaces, driving a population influx into
cities like Charleston, Atlanta and Charlotte.
Primary tech markets, like San Francisco and Silicon Valley, will continue to sport some of the highest
construction costs nationwide, thanks to high demand as the economy continues to become more tech-focused.
There will be an increase in office construction demand for secondary tech markets, like Chicago and Austin, in
2016.
Renovation activity reached new highs in 2015, thanks to a push for sustainable office development focused on
attracting and retaining millennial talent, while enhancing corporate social responsibility. This push for new build
outs was not limited to office spaces, with retail and industrial developers redeveloping existing space to include
new technology and engage consumers in unique ways. This trend will continue in 2016.
5. GDP grew more slowly QoQ in Q3, due in part to deceleration in
export activity
5
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ContributionstopercentchangeinrealGDP(SAAR)
The 2.0 percent increase in GDP growth was driven by an
increase in personal consumption expenditures and
nonresidential fixed investment.
Source: JLL Research, Bureau of Economic Analysis Most recent available data at time of publication
6. GDP per capita continues to grow at a steady rate, encouraging
consumers to spend
6
Source: JLL Research, World Bank Most recent available data at time of publication
$42,000
$44,000
$46,000
$48,000
$50,000
$52,000
$54,000
$56,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
GDP per capita
8. Q3 Construction Backlog Indicator (CBI) declined in all regions
except the South, indicating a decline in activity in early 2016
8
Southern growth was driven by large scale projects, most notably in the industrial sector
7.8
months
10.3
months
8.5 months6.5
months
National average
construction backlog
8.5monthsThe CBI indicates the number of work
that will be performed by
commercial/industrial contractors in
the next few months, based on
projects in the pipeline currently.
Source: JLL Research, Associated Builders and Contractors Most recent available data at time of publication
9. 9
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Current H1 2016 H2 2016 2019
Improving Stable Declining
Survey: How different types of firms view the industry
Development firms surveyed agree that construction activity will
remain stable through early 2016, with a chance of decline in H2
Source: JLL Research, ENR
12. 1500
1700
1900
2100
2300
2500
2700
2900
3100
3300
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Materials Index
12
ENR Materials Price Index tracks weight price movement of structural steel, Portland cement and 2x4 lumber.
Weightedpricemovementofsteel,cementandlumber
The steel market has been flooded by low-cost
product, however glass prices are skyrocketing,
and construction companies are acquiring glass
manufacturers as a result, in order to cut costs.
(YTD, Nov.)
Materials input prices dropped 0.2 percent MoM at the end of 2015
as the global economy slumped
Source: JLL Research, ENR
14. $0
$200
$400
$600
$800
$1,000
$1,200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average weekly wages construction, December YoY
14
4.2 percent growth
YoY
As demand increases and labor supply stays flat, wages for highly
skilled construction laborers are increasing quickly.
Source: JLL Research, Bureau of Labor Statistics
15. 15
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400
Massachusetts
New York
Washington, DC
Illinois
California
Minnesota
Pennsylvania
Texas
Michigan
Washington
Ohio
Colorado
Missouri
Georgia
Average weekly wage 2014
Lower cost labor is often
present in right- to-work
states, such as Georgia.
Massachusetts leads the way in terms of construction labor costs,
while southern and western states remain cheaper
Source: JLL Research, Bureau of Labor Statistics Most recent available data at time of publication
16. 16
Nonresidentialputinplace($M)
$580.0
$600.0
$620.0
$640.0
$660.0
$680.0
$700.0
Nov. 2014 Jul. 2015 Aug. 2015 Sep. 2015 Oct. 2015 Nov. 2015
Value of nonresidential construction put in place, seasonally adjusted
Nonresidential construction put-in-place value declined 0.8 percent
MoM in November, though it is up 10.2 percent YoY
Source: JLL Research, U.S. Census Most recent available data at time of publication
17. $0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
Q4 2015 direct average asking rent ($p.s.f.)
17
The San Francisco Bay Area remains one of the highest
cost markets, both CBD and suburban, both in
construction and leasing, though it remains in high
demand.
Highest-cost office construction markets on the coasts also have
highest rents
Source: JLL Research
18. 0
5000
10000
15000
20000
25000
New York Boston San
Francisco
Chicago Washington,
DC
Los Angeles Seattle Portland Denver Phoenix
Q2 2015 Q4 2015
18
Cost of construction in major markets (Q4 2015)
RLB Comparative Cost Index
tracks the bid cost of
construction, including labor,
materials, contractor and
overhead costs.
RLBComparativeCostindex
Top construction markets all saw approximately 1.0 percent growth
between Q2 and Q4 2015
Source: JLL Research, RLB
19. 19
Construction put in place sector Nov. 2014 Nov. 2015
Education $79.0M $89.9M
Manufacturing $65.3M $84.1M
Commercial $68.9M $69.1M
Office $49.0M $59.1M
Healthcare $39.7M $40.7M
Lodging $17.3M $22.2M
The growth in construction value YoY was driven by projects in the
education and manufacturing sectors
Source: JLL Research, U.S. Census Most recent available data at time of publication
20. 2015 was a strong growth year
for all property types, but growth
is beginning to slow
21. 21
16.9 m.s.f. 22.3 m.s.f. 14.2 m.s.f.
Q4 2012
13.3 m.s.f.
Q4 2013 Q4 2014 Q4 2015
Office starts
For the first time since the recession, office deliveries are
outflanking starts, as the 22.3 m.s.f started in 2014 comes to market
Source: JLL Research, Costar Group
22. 0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Completions(s.f.)
22
Historical construction completions
Office completions are nearing pre-recession numbers, as 2014
starts come to market, with more to come in 2016
Source: JLL Research Most recent available data at time of publication
23. 23
Industrial construction
Retail construction
142.2
m.s.f. under
construction
Q4 2015 Q4 2014 Q4 2015
174.9
m.s.f. under
construction
59.6
m.s.f. under
construction
53.3
m.s.f. under
construction
Q4 2014
Q4 2015
Office construction
Q4 2014
88.5
m.s.f under
construction
81.2
m.s.f under
construction
Retail construction in Q4 was up 26.3 percent YoY as consumer
spending rebounded
Source: JLL Research, CoStar Group Most recent available data at time of publication
24. 24
Office completions (s. f.)
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
2015 was a banner year for office completions, up each quarter
from 2014
Source: JLL Research
26. Office vacancies are highest in Rust Belt and smaller East Coast
markets, signaling a decline in new construction in these markets
26
The lowest vacancy rate in Q4
was in Salt Lake City, with total
vacancy of 6.4 percent.
-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
New Jersey
Fairfield County
Westchester County
Phoenix
Cleveland
Milwaukee
Detroit
Dallas
Hartford
Cincinnati
Total vacancy (%)
YTD total net absorption (% of Inventory)
Source: JLL Research
31. Q4 2015 retail construction varies noticeably by subtype, with the
vast majority of activity in general retail, rather than specialty centers
31
24%
3%
73%
U/C inventory by type
Shopping Center Specialty Center Other
General retail, power centers and malls are the
top three subtypes of retail, by square footage
under construction. This reflects growing retail
trends in redevelopment of existing stores in
order to support shifting demand from
consumers looking for unique, omni-channel
shopping experiences. We expend this trend to
continue in 2016, though consumer spending will
plateau as the global economy sputters.
Source: JLL Research, CoStar
33. What’s next for construction?
Politics as un-usual: The 2016 election is ramping up and will affect consumer behavior as domestic residents weigh
who they think will become the next leader. Further, the upcoming fight over the debt ceiling could delay government
buildings and other public works if the government delays its budget.
The Fed increased interest rates, indicating faith in the domestic economy; however, the global economy has
slowed, and contractors are uncertain how this may affect the markets. Most noticeably, many inputs, such as low-cost
steel, are manufactured in bulk in China. As its manufacturing sector continues to decline, materials prices will
continue to drop into 2016.
Wages will remain the key cost driver for construction, as materials prices remain relatively low in the short term.
There remains a dearth of trained construction employees, especially in trade positions, and wages are rising as a
result.
Increase in starts in 2016 will continue, but at a lower rate. General economic growth nationwide has slowed, and
the construction industry will be no different. However, demand from downstream markets will stay strong and
construction profit margins will continue to grow, keeping construction growing at a faster rate than the overall
economy. However, developers are starting to be more wary and will be more careful in starting projects, especially in
single-industry markets, such as Houston.