Back to the Salt Mines
- Dec 05, 2012
It has been a month since the election, and the rhetoric regarding the fiscal cliff, the fiscal equivalent of Y2K per economist Dr. Peter Linneman, has taken center stage for pundits and newsrooms. The ability to create living wage jobs needs to remain at the forefront of the conversation, regardless.
Some of the positive real estate news for job creation – even though we’re still way below recession numbers in terms of construction – is that the amount of square feet being created has risen from 22 million to 26 million. Most of the progress has been in industrial and single-family residential properties. Capacity utilization is increasing for durable-goods manufacturers and there actually may be a net shortage of new housing in 2013 since the cost-benefit to rent versus owning will soon intersect, and families might be willing to take the plunge into home ownership. But they won’t be able to do that without a job.
Certain cities like New York and Washington have fared better in this downturn in terms of job replenishment. Both cities have created more than 125 percent of the jobs they lost. On the flip side, Los Angeles has recovered less than 25 percent. Overall, the U.S. has replaced 40 percent of the jobs lost thus far. Construction jobs will certainly help and with lenders trickling out more and more commercial and industrial (non-real estate) loans for operating companies, employers will hopefully figure out a way to hire, regardless of the healthcare funding tax.
We can look to IT, biotech, and green/environmental industries, but energy, healthcare and education will also be a massive gateway for existing and incoming workers. The key will be the re-education and re-tooling of workers, which will take several years and a lot of patience. The investment is needed now so once all of the looming CMBS debt maturies are dealt with between now and 2017, along with the adjustments being made to the tax structure, we can get past the Great Recession and create a history with stories of success and progress.
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