How the Labor Market Impacts Commercial Real Estate
September 2021
Video Highlights
The labor market recovery has been solid thus far, regaining three quarters of jobs lost during the pandemic. However, an ongoing labor shortage persists with a 2.5M person shortfall.
Low labor force participation, a skills gap, dislocation issues, and more could all contribute to this shortage.
This hiring disconnect could weigh on the economic outlook and stoke wage inflation.
The end of federal unemployment benefits and the return of students to the classroom may ease some of the pressure, but it’s unlikely that the change will be substantial.
Hotels, Senior Housing, and Retailers may face hiring and wage cost issues.
Apartments and Self-Storage rely less on human labor but may still feel the pinch.
A lack of qualified labor and high construction costs have had an unexpected upside in limiting the availability of new supply. As job creation picks up, demand for nearly every segment of CRE is poised to strengthen.