If the US continues downward, construction and real estate sectors could be adversely affected, says JLL, whereas it notes MassBenchmark's Current Economic Index puts the state's economic growth rate at 4.7% during Q1. The report further indicates that 5,000 jobs were added in the first quarter, well above the pace of 3,000 for that same period in 2006. There was a jump of nearly 30,000 jobs between Q1 '06 and Q1 '07, according to JLL, which considers the first three months of the year to be the best quarter in Massachusetts since the start of 2003.

"Greater Boston has reason to be optimistic for the rest of 2007 after a highly productive first quarter," says the overview, further indicating that the state's housing market has bucked the national slowdown. While there were more than 2,000 petitions to foreclose issued in Massachusetts in March, double that from March 2006, the penetration of subprime lenders here is 18.2%, compared to the US average of 20.1% and the alarming rates of 27.6% in Rhode Island, 25.7% in California and 23.9% in Nevada, based on the amount of money lent to purchase homes. Q1 '07 single-family home sales were up 13.8% versus Q1 2006, says JLL, while condo sales rose a surprising 15.4%.

The overall economic stability of the state is underscored by a record $24 billion of goods and services exported from Massachusetts last year, a majority of it technology-related. Final figures were not provided, but Q1 2007 is expected to exceed that record pace, says JLL.

The employment gains are particularly encouraging given that there is a re-emergence of core industries critical to demand for commercial real estate, says JLL, which cites education and healthcare services as leading the pack during the past year in Massachusetts. From Q1 2006 through the end of Q1 2007, education and health services registered a 3.0% increase in job growth. The professional and business-services category was second at 2.6%, followed by leisure and hospitality at 1.9%.

"The area will continue to see growth from companies that demand access to its highly educated labor force and intellectual capital such as wealth management or biotechnology," says JLL. On the down side, even though housing should remain a buyer's market, above-average home costs and a higher cost of doing business may limit population accretion and the state's labor force, according to the report. Massachusetts had a 4.0% unemployment rate in the first quarter compared to 4.7% nationally. Continued economic growth is expected, says JLL, but it will be "restrained by high costs" long term, and should again track slower than the US over time.