Long-Term Office Gains Depend on Economy

The New Jersey office-market recovery appeared to be gaining traction, as evidenced by nearly 1.5 million sf absorbed by mid-year. However, any long-term stabilization of the office market will be dependent on a strengthening New Jersey economy, which had been hampered by tepid employment growth during the past two years.

Since the beginning of the year, New Jersey has only added approximately 15,500 jobs. At this rate, the state would add a total of 23,000 jobs in 2007, less than the 33,900 jobs created in 2006. Furthermore, while solid gains in employment figures were being made on a national level through mid-2007, the slumping housing market combined with the recent meltdown in the lending markets could begin taking their combined toll on the US economy.

In August, the US Labor Department reported that the nation’s payrolls shrank by 4,000 jobs, which reflected the first decline in four years. Future employment data will need to be carefully monitored to determine whether this downturn was a short-term anomaly or the beginning of a trend, wherein companies will become more hesitant about increasing their payrolls. The creation of professional-services jobs are a vital component to future growth within the local and national office markets.