Strong job growth in New York City but challenges lie ahead

N.Y.C. is on pace to have the strongest (private sector) job growth since 2000. That is quite amazing considering all it's been through this year - global and national economic pressures, a major U.S. election, fiscal and regulatory cliffs fast approaching and finally, a storm named Sandy. It shows how resilient and versatile this market can be. However, not all is perfect. Over the last two months, N.Y.C. has seen its private sector job count decline. For the non-office sector, the reasons are mixed - retail and leisure & hospitality right-sizing themselves to layoffs in the health care industry to seasonal adjustment issues in education. Look for further negative (but likely temporary) effects in retail and leisure & hospitality to pop up in the next jobs data release due to Sandy. Turning the focus to job creation in the office sectors, which is what directly impacts commercial real estate, we find that the trend has generally been positive in 2012. During this year (through October), office jobs have seen increases in eight out of the 10 months, with July and October being the lone holdouts. The culprits were different in those two negative months with financial activities (which was quite anemic throughout most of the summer) declining significantly in July (down 3,600 positions) while professional services found a nick in its otherwise shiny armor in October (down by 4,000 positions). The twist to this year's job growth is that it has not made a significant impact in the vacancy rate as firms have accessed their current underutilized space and have been generally taking less square footage per employee - not only because of the primary industry now growing (technology/advertising/media/information or TAMI) which leans toward an open plan layout, but also because of improved space efficiencies across all tenant types. Looking at the very near future, there will be a direct correlation between job growth in N.Y.C. and the actions of our leaders in Washington, D.C. Fiscal and regulatory cliff issues must be resolved for expansion to continue. Furthermore, a recovery from Sandy, especially for Lower Manhattan, must be of the highest priority. Robert Sammons is the vice president research services at Cassidy Turley, New York, N.Y.