Employment in 2103 Set Records, But Office Sector Lagged
The year 2013 was one for the record books in New York City.
- The number of tourists visiting New York City reached a record 54.3 million people.
- 1 World Trade Center was confirmed as the tallest building in the Western Hemisphere.
- The number of people working in the city reached a record 4.002 million, topping 4 million for the first time in the city’s history.
- The number of jobs added during the year was a record 93,700.
Of course, for the real estate industry there is nothing more important than jobs, and the growth in employment in New York City in this recovery has been remarkable. Since reaching a bottom in November 2009, payroll employment in the city has increased by 333,000 jobs. That’s more jobs than were created in the entire 2003-08 recovery. And they were created in fewer months. In fact, on a jobs per month basis, this expansion is a record setter.
- In the long recovery from the city’s near bankruptcy experience of the first half of the 1970s, more than 463,000 jobs were added to the local economy. But that took more than 12 years, for an average of roughly 37,000 jobs per year.
- In the Silicon Alley boom years from 1992 to 2001, slightly more than 490,000 jobs were created in a little over eight years, or 60,000 jobs per year
- The 333,000 jobs added in the current expansion have come in only four years. In this expansion, New York City is averaging more than 81,000 jobs per year.
Despite the record-setting performance, 2013 was not a great year for office real estate. Cushman & Wakefield’s Manhattan vacancy rate was 11. percent in December 2013, up from 9.5 percent a year earlier. Part of the reason for the increase was new construction, as new office towers were completed in Midtown, Midtown South and Downtown Manhattan.
But another part of the reason for the vacancy rate increase was the slow pace of growth in the key office-using employment sectors. In 2013, employment in financial services, information (media) and professional and business services increased only 8,700 jobs. These three sectors account for nearly one third of all the jobs in New York City, but in 2013 they accounted for only 9.3 percent of the jobs created. That slow growth amidst all the records is a major reason for the slow performance of the office market, particularly in Midtown.
To see the office market improve significantly in the coming year, employment in office-using industries needs to join the record setting performance of the New York City economy.