The Bureau of Labor Statistics (BLS) released employment data for December 2024, revealing that the economy added 256,000 jobs. The unemployment rate remained at a steady 4.1%, and overall payroll employment increased by 2.2 million throughout the year. While this is lower than the previous year’s increase of 3 million jobs, it still indicates ongoing economic growth.
However, according to a recent report from Marcus & Millichap , this job growth has both positive and negative implications for commercial real estate.
On one hand, most of the hiring in December occurred in education and health services sectors which could lead to future success in multifamily and retail properties due to an increase in high-wage positions. This also highlights continued demand for medical office spaces.
On the other hand, there was a decline in manufacturing hiring which could negatively impact industrial properties as well as slow net absorption rates due to oversupply issues. However, analysts at Marcus & Millichap predict that these supply pressures will ease up over time given a decrease in development projects planned for next year.
Another factor affecting commercial real estate investment is interest rates set by the Federal Reserve . With improved job growth and low unemployment rates coupled with inflation remaining high at around 2%, there is less likelihood of any rate cuts within upcoming months according to analysts at Marcus & Millichap . This could result in upward pressure on Treasuries causing long-term mortgage rates on commercial properties to rise potentially hindering investment sales moving forward.
