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Confirmation of Slowed Job Growth Likely to Keep Landlords Aggressive on Lease Deals
The job news “is an obstacle and a cautionary line creating uncertainty in the short-term outlook,” said Carl Conceller, principal of NAI Desco in St. Louis, MO. “Landlords are keenly aware of the limited tenants in the market place and the need to maintain occupancy in a highly competitive market. Landlords will continue to be aggressive in structuring leases to capture tenants as early as possible, while blocking them from the competition.”
For the record, here’s a summary of monthly jobs number released this past week by the U.S. Department of Labor: Total nonfarm payroll employment grew by just 69,000 jobs; following 77,000 new jobs in April. By comparison, the average monthly employment gain in the first quarter of the year was 226,000.
In May, employment rose in health care, transportation and warehousing, and wholesale trade -basically the industrial sector. While construction, accounting and bookkeeping services, in services to buildings and dwellings and professional and business services lost jobs – basically the office sector.
“The report was disappointing, but not unexpected considering the negative economic news of late regarding the European debt and its potential impact on the U.S. economy,” Conceller said. “The report, in conjunction with the European debt crisis, has obviously disrupted markets and caused uncertainty among U.S. businesses.”
Larry Hausman, senior associate of Marcus & Millichap in Louisville, KY, said that if landlords were smart they would make whatever deals they can get done and still make a profit.
The job numbers don’t make prospects for the investment market very attractive either, Hausman said.
“Investors are going to shove their hands even deeper into their pockets, choosing to take their licks against inflation while staying in cash a while longer,” he said. “There will be fewer buyers until Europe stabilizes and more than 125,000 new jobs are created each month (what is needed to break even after population growth).”