Will the Mid-Term Election make a Difference for the Office Market?
I try to make it a point to keep my political opinions out of my posts. I think it is safe to say that the commercial real estate industry is predominately a Republican crowd, me included. However, this post isn’t about my politics. On Friday another weak job report came out further reinforcing the position that while the recession is over, to this point it has been a jobless recovery and it could be a long road back for the office market. Those of us that lease office space or represent companies who do for a living understand that the office market will not see any significant improvement until companies begin to hire again in a significant way.
Weak Jobs Fallout
It’s Confidence that Drives Hiring
In viewing this video you have to sit through some political banter, but all of the participants agree on the point that Corporate America is in relatively good shape. Earnings are solid and most companies have strong cash positions, yet they are not hiring. Jeff Matthews of RAM Partners makes the most salient point stating,” Corporate America is not going to start hiring until they get some clarity on tax rates and healthcare costs.” Today, companies are simply reluctant to hire as they wait for a clearer vision as to what the future holds.
Historically the office market lags real job growth by 2-3 quarters and until we begin to see both significant and sustained job creation, the office market will continue to sputter and get some legs under its recovery. While it remains to be seen if the Republicans will have a big day in early November, I think most in the commercial real estate industry are hoping so. Regardless of what happens it will be at least until 2011 before Corporate America reacts.
There have been several recent reports by numerous real estate data companies and brokerage firms that suggest for the most part the office market has bottomed out and I agree with the position that the worst is over, but the jury is still out as to when a significant recovery in the office market will commence.