CoStar Market Insights: Phoenix Employment Growth in Construction, Manufacturing and Office-Using Jobs Supports Commercial Real Estate Performance
Phoenix slipped in the July employment rankings, placing fifth among all major U.S. metropolitan areas for job growth. Metro area employment expanded 2.9% over the past 12 months ending in July, with the addition of 60,500 jobs. Momentum slowed from the 3.1% growth, that netted the metro area second place for employment growth in June.
While employment generally slows during the hot summer months in Phoenix, growth surpassed the long-term average in July of 1.8%. The education and health services sector led job growth with 18,700 new positions. The construction sector followed (11,900 jobs), supported by a ramp-up in residential and commercial development as builders respond to demand generated by strong in-migration and expanding businesses.
The trade, transportation and utilities and manufacturing sectors also posted notable gains, growing by 8,200 jobs and 7,500 jobs, respectively. Job gains in these sectors are stimulating demand for industrial space. The market currently ranks seventh in the country for industrial demand.
Office-using employment growth increased by a modest 1%. Job losses in the information sector (-1,200 jobs) impeded more significant gains, though the impact was offset by hiring in professional and business services (6,000 jobs). Steady office-using job growth has fueled demand for office space. Phoenix ranks fifth in the nation for annual net absorption, totaling three million square feet.
Robust hiring is expected to continue through the remainder of the year, benefiting commercial real estate fundamentals. The comparatively high unemployment rate is a positive signal to business leaders looking to expand operations to other metro areas that they can find the labor they need in Phoenix. The larger pool of unemployed workers should help support more company relocations and expansion in the metro area.
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