Today, people want to go where the jobs are. But where is that?
At a ULI Fall Meeting 2010 panel on “Regional Economic Drivers,” moderated by Heitman Managing Director Mary K. Ludgin, Richard McLemore of MetLife Real Estate and Craig Thomas of AvalonBay Communities, Inc., attempted to answer the question “where and when will the jobs show up?”
Both panelists extrapolated current and past trends to predict the future, while noting that lower long-term job growth is most likely going to be the “new normal.” Right now, McLemore postulated, the nation is in a “tentative cyclical recovery,” which is already showing signs of moderating. Cyclical rebounds in employment have been occurring in the finance sector, particularly in New York and San Francisco, but hiring has been slowing lately due to uncertainty. Another rebounding sector is high-tech in cities such as Boston and San Francisco, due to ever-increasing global demand for technology. At the same time, however, jobs in state and local government are disappearing rapidly. A number of long-term structural trends inhibit economic expansion and job growth, including:
- The ongoing decline in U.S. manufacturing, due to productivity growth and off-shoring;
- The probability of further public sector job cuts; and
- Demographic trends, which correlate with regional performance. Cities with high percentages of young people, such as Austin, are more likely to have higher job growth.
To help predict the future, Thomas presented statistics on 2010 regional job growth to date in different markets, leaving out the Federal government. Who would have thought that the fantasies created by “Tinseltown” would lead the nation out of a very real recession? As it turns out, Thomas noted, Los Angeles has led the U.S. in regional job growth this year, creating some 17,000 new jobs in the production of “content” including movies and entertainment. Other rebounding markets include:
- “Eds and meds” in many major cities including New York, Dallas, Washington, D.C., Philadelphia, and Chicago. Growth in this sector is due not only to the aging population but also due to medical innovator, along with the many people who are going back to school in order to improve their chances in the job market.
- Professional business services – although many of the jobs in this sector are temporary -- in Washington, D.C., Dallas, Atlanta, Philadelphia, and other cities.
- Retail in New York and Washington, which has grown along with those cities’ relative prosperity.
- Leisure and hospitality in New York.
Some cities are likely to jump ahead of the pack in job growth because they are global entry points for immigrants beginning their new lives, panelists agreed: think New York, San Francisco, Washington, D.C., Boston, and San Francisco. As for the Midwest, it is becoming a “screaming bargain,” due to the low cost of land and housing, low wage levels, and available human capital.