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Job Losses Mount, Industry Awaits Fallout

New Jersey has witnessed a steady erosion of its share of total pharmaceutical employment in the past decade, which will likely cause a continued uptick in occupancy rates.

By Maria Wood | Updated on March 23, 2009

Job losses are never a positive for the commercial real estate industry. But New Jersey has an added concern–a spate of mergers within its bedrock pharmaceutical sector.”Flat out–job losses hurt the commercial real estate market, because it lowers demand,” says David T. Houston Jr., president of Colliers Houston & Co. in Teaneck. “If people aren’t working, you don’t need office space for them.”

Houston further points out that the impact of employment reductions is not immediately apparent since there is typically a time lag between when job cuts are announced and when space gets put back on the market, an interval that could take up to two to three quarters. Conversely, “when the economy recovers, you don’t go out and lease the space and then hire the people,” he says.

“Not every job loss means a building gets put on the market,” he continues. “But clearly in terms of a long-term trend, this is going to result in, and has resulted in, occupancy rates increasing in New Jersey and it has put pressure on landlords because tenants pretty much have an upper hand right now.”

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