Boston apartment rents are up nearly 5% year-over-year. In New York, it’s the fifteenth consecutive month of year-over-year rent increases. In fact, rents are up in all 79 U.S. metro areas tracked by REIS. It’s also getting more expensive to rent in smaller cities across the Northeast. Good news for apartment investors, but what’s behind this record period of rent growth?
One piece of the puzzle is resurgent job growth in and around the New York and Boston metro markets. The U.S. economy is now at the six-year mark in its recovery from the Great Recession, but it’s been a rocky road. Since February 2010 — the low point for private sector employment nationwide — employers began to add jobs, but progress erasing the jobs deficit was slow for some time.
Looking closer to home, job growth has been down a rocky road before becoming steadier in our market from New York to Boston. In May, according to the Joint Economic Committee of the U.S. Congress, private sector employment in Massachusetts increased by 7,100 jobs. Over the past year, businesses in Massachusetts added 59,300 jobs as compared to 44,400 jobs over the 12 months period through May 2014. Since February 2010, Massachusetts businesses added 254,500 jobs (an increase of 9.2%), which lags the national increase of 11.7% in private payrolls over this time. The sectors with the greatest job gains in percentage terms since February 2010 are construction at 23.9% (25,500 jobs) and professional and business services at 16.2% (74,400 jobs).
Looking at New York, private sector employment in May increased by 47,400 jobs. Over the past 12 months, New York businesses added 134,000 jobs, less than the increase of 170,100 jobs over the 12 months through May 2014. Since February 2010, New York businesses added 800,300 jobs, an 11.5% increase, which nearly matches the national average of 11.7% over this period. The greatest job gains in percentage terms since February 2010 are leisure and hospitality at 22.2% (160,000 jobs), construction at 16.0% (48,900 jobs) and professional and business services at 15.7% (170,300 jobs).
Today, the economy has recovered the 8.7 million jobs that were lost between the start of the recession in December 2007 and early 2010. Private employers added 12.6 million jobs to their payrolls in the 63 months since February 2010 — an average of 199,000 jobs a month — and have continued to add jobs since then. They added 262,000 jobs to their payrolls in May 2015, while government employment rose by 18,000, bringing total nonfarm payroll employment growth to 280,000. Total nonfarm payroll employment was 2.4% (3.3 million jobs) higher in May 2015 than it was at the start of the recession.
Surpassing the pre-recession jobs peak is a milestone on the way to a full jobs recovery, but as the population continues to grow, the potential labor force can be larger than any time previously. If the pace of job growth continues at the average growth of 255,000 a month over the past year, the labor market would be restored to healthy conditions in a reasonable period of time.
About the Northeast Private Client Group
Northeast Private Client Group is the fastest-growing mid-market investment sales firm in the Northeast, providing unmatched results by combining specialized market intelligence with a relationship-based marketing strategy that caters to clients’ needs. The firm’s collaborative and research-driven solutions are tailored to meet the individual needs of investors and property owners across the Northeast who are looking to buy, sell or exchange mid-market properties, including mixed-use, multifamily, retail and office assets. Northeast Private Client Group’s highly disciplined process is just one of the many reasons the firm has earned the CoStar Power Broker designation year after year. www.northeastpcg.com