On February 11, the Bureau of Labor Statistics released its January job numbers, noting that non-farm payroll employment increased by 130,000. In the same release, the BLS reported that, rather than the 584,000 jobs initially estimated as gained in 2025, the revised total was 181,000.
There were many reasons for these large discrepancies, including delayed surveys from companies and fewer firms responding to the questionnaires. The main point is that the revisions make 2025 “the weakest year for employment growth outside of a recession since 2003,” according to a recent article by Ryan Severino, BGO Chief Economist.
This was not a one-time issue. The BLS regularly revises its job numbers downward after releasing its preliminary, headline-making data. “If you look back at the last 48 monthly job releases, 38 of them were revised lower,” said Marcus & Millichap Vice President John Chang in a video on whether major job-number revisions change the commercial real estate (CRE) outlook. He was also skeptical about the January jobs numbers, adding: “If history teaches us anything, there’s a good probability that the number will be revised lower.”
The Labor Upside
Severino noted that the January job data kept the unemployment rate stable at 4.3%, indicating a continued tight labor market. Additionally, yearly nominal wage growth of roughly 3.7% continues to outpace inflation, which stood at 2.4% in January.
Chang pointed out that while job numbers have declined from earlier expectations, the U.S. is still creating jobs. “It’s just at a slower pace than we’ve experienced in the post-pandemic era,” he said.
Then, There’s CRE
The key question is whether the downward revisions will disrupt the commercial real estate industry. Chang and Severino offered somewhat different perspectives across the four major property sectors.
Apartments — Geographical and Job Differences
Chang explained that slower job creation will likely mean a drop in net absorption. “In markets where there has been considerable new development, the time it takes to fill those apartments will be longer than a lot of developers planned,” he said. The result could be ongoing concessions and sluggish rent growth in those regions.
On the other hand, many of the jobs created last year were in healthcare. “Robust healthcare hiring directly supports apartment demand,” Severino observed.
Office — An Increase in Usage
Severino explained that office-using industries have shown little net hiring since early 2024, a trend that has been reflected in both office utilization and leasing.
Chang, however, suggested that the decline in professional and business services jobs could actually bolster space demand. “As prospective employees compete for fewer job openings, their willingness to commute to the office on a regular basis will continue to fuel a rising office attendance rate,” he said. This could boost demand for office space in major metros.
Retail — Still Growing, But Slowly
With retail closely tied to consumer spending, real wage growth has supported ongoing consumption, even as the sales growth rate has flattened, according to Severino.
At the same time, that growth rate, combined with inflation-adjusted core retail sales, has led to a fairly stable retail outlook for 2026, “especially when you factor in the nominal pace of retail development,” Chang said.
Still, Severino added that “retail employment has been largely flat, suggesting greater efficiency of space, which we have already observed.”
Industrial — Continuing Normalization
Chang noted that smaller infill industrial properties, along with small cities that have seen minimal industrial development, are outperforming. Large big-box industrial properties are not faring as well. Markets that have experienced significant industrial development over the past few years are generating more moderate performance, he said.
Meanwhile, Severino pointed out that manufacturing and related employment have also been flat since early 2024, reflecting easing demand and inventory normalization.
The Upshot
Severino and Chang agreed that the downgraded job revisions have not affected key economic factors such as interest rates or expectations for future federal funds rate cuts. The job numbers also did not “materially change the commercial real estate investment outlook,” Chang noted.
While the labor market is not contracting, it is not meaningfully expanding either. Even so, Severino explained that the issues affecting jobs in 2025 have largely abated, and the January numbers support the idea of a stronger 2026.
“One month does not make a trend,” he said. “But with lower inflation, lower interest rates, and less policy uncertainty, 2026 should see improvement versus 2025.”
