Yes, Greg David’s headline is accurate, but just how strong has job growth been in the office-using sector?
The answer: not very.
While New York City has continued to add jobs on a year-over-year basis every month since March 2010, the pace of increase has slowed dramatically. Total job growth in the 12 months through July 2016 was a respectable 98k, however, this gain is smaller than the increases observed over the prior 3 years (+106k jobs in the 12 months through July 2013, +132k jobs through July 2014, and +128k through 2015.)
More important is the dramatic slowdown in the addition of office-using jobs: just 19k office-using jobs were added between July 2015 and July 2016, a fraction of the 49k jobs added in the 12 months ending July 2015 and the 46k jobs added in the 12 months ending July 2014. As a result, the year-on-year rate of growth in NYC office-using employment is just 1.4%--a fraction of the 3%+ growth rates seen throughout 2014 and 2015.
What does this mean for office space? It’s hard to see a catalyst for a robust increase in rents 1) without a meaningful increase in job growth and 2) with a meaningful increase in new space.
Note that greater pressure on revenue is just one additional reason for companies to look at other ways of reining in costs. Of 521 publicly-traded companies domiciled in New York City (almost all of whom have operations outside the city as well), just 127 had annual revenue (and not earnings) growth of 5% or more—less than ¼ of the companies. Without a measurable increase in top-line sales, it’s going to be hard to envision a dramatic increase in firm headcount at this point in the cycle.
Note: Updated figures for Q1 2016 trends in Manhattan will be released after Labor Day; the more recent data encompass the NY Metro Division (which includes all 5 boroughs, as well as Westchester, Rockland, Hudson and several other NY and NJ counties.)
Question: What is contained under “Professional/Technical Services?”
Answer: This sector includes legal, architectural and accounting services, consulting, advertising and the all-important “computer systems design and programming” category.