Overall, the U.S. economy remains healthy, powered by solid fundamentals and tax-cut stimulus, and most economists expect the expansion to continue at least through 2019. So far in 2019, most major economies worldwide are still growing at a reasonably healthy clip, still creating jobs and still absorbing space.
Labor shortages are one of the most significant challenges commercial real estate faces. With unemployment at record lows and wages rising, the cost of labor will increase, impacting profitability. However, wage growth can be considered a positive as it boosts consumer spending and feeds profitability, thus creating more jobs and more demand for space.
Locally, Charlotte’s unemployment rate dropped from 4.7% in 2007 to 3.3% currently. Job growth is expected to slow but to remain healthy. Charlotte is the No. 22 city for expected total nonfarm employment gains, projected to add 23,500 jobs in 2019.
One popular trend in the office sector has been growth of tech companies. Charlotte is ranked No. 6 for tech growth, with 13.7 million square feet of net absorption from 2008 to 2018. To meet the increasing amount of office demand, 3.17 million square feet of office space is under construction in Charlotte, approximately 3% of the overall market inventory.
Coast-to-coast, demand by renters for apartments is 300% higher than it’s ever been before, and the Sun Belt has outpaced any other region for demand. Charlotte ranks No. 13 for net absorption from 2009 to 2018, with 52,000 units absorbed. Since 2008, Charlotte ranks No. 1 for net absorption relative to its size. Overall net office absorption over the past 10 years was equal to 39.6% of its 2008 total office inventory.
For more, check out Cushman & Wakefield’s U.S. Economic Outlook.