A new analysis from Marcus & Millichap suggests the U.S. economy now needs to generate fewer than 50,000 jobs per month to keep unemployment steady, down from the earlier rule of thumb of roughly 100,000 jobs. The firm links this shift to demographic trends, rising worker productivity and slower immigration, which together are changing how labor market conditions flow through to commercial real estate demand and investment decision-making.
Recent data underscores how the employment backdrop has cooled without triggering a sharp rise in unemployment. The economy added 29,000 jobs in September, and downward revisions to July and August removed another 60,000 positions that had previously been counted. Year-to-date job gains total 612,000. Moody’s projects that the economy will add 735,000 jobs in 2026 and 645,000 jobs in 2027, pointing to a slower but still positive hiring environment.
Even with modest job creation, the unemployment rate has held in the low-4% range. Retirements and reduced net immigration are limiting labor force growth, helping to keep joblessness contained. At the same time, productivity is rising meaningfully in white-collar sectors. Economist Gad Levanon notes that real productivity in professional and business services stands 16% above its 2019 level, an important driver of output even as headcounts plateau or decline.
These dynamics are playing out unevenly across property types. In multifamily, weaker employment growth is dampening household formation and apartment absorption, while also slowing work-related migration. Sun Belt markets are particularly exposed, as they continue to work through elevated multifamily supply against a backdrop of moderating demand.
The retail sector presents a different picture. Consumer spending has remained relatively healthy, with retail sales up 6% year-over-year through August, or about 2.5% after adjusting for inflation. However, stronger sales volumes have not translated into comparable demand for physical store space. Since early 2025, net retail absorption has averaged under 2 million square feet per quarter, well below more than 6 million square feet per quarter in 2024 and 12 million square feet per quarter in 2019.
In industrial, e-commerce expansion and shifts in inventory strategies tied to tariffs continue to reshape space needs. While office-using employment has fallen by nearly 325,000 positions over the past two years, the office sector has recently moved back into positive net absorption, supported in part by return-to-office patterns that are stabilizing demand in some markets.
Marcus & Millichap notes that slower job creation is providing less direct support for new space absorption. As a result, the firm emphasizes that near-term revenue growth will hinge more on operational efficiency, economies of scale, value creation initiatives and expense control. At the same time, reduced new construction activity and eventual payroll gains could help underpin property performance, creating opportunities for investors prepared for this evolving demand landscape.
