Economy Watch: Eds and Meds Help Sustain Markets in Down Times
- Apr 17, 2017
The retail sector, as well as other kinds of real estate, are well known for suffering from the slings and arrows tossed by a volatile economy. But it turns out that a solid base of education and medical jobs can smooth out volatility in the retail sector, as well as in multifamily. That’s according to a new analysis by CBRE Group, using data from the most recent recession and afterward.
The report outlines how, among the largest U.S. metro areas, those with higher concentrations of education and medical jobs experienced many of the smallest declines in retail and apartment rents during the 2007 to 2009 recession. Indeed, some of the smallest rent declines were in eds-and-meds strongholds such as Philadelphia, Pittsburgh and St. Louis.
Even in gateway markets such as New York and Los Angeles, the effect of eds and meds on the local economy and the health of commercial real estate markets was greater than generally appreciated, noted Ian Anderson, CBRE director of research and analysis in Philadelphia. “Not only does this sector provide a source of growth, but it also delivers a notable degree of stability to commercial real estate properties and markets,” he said.
The analysis identifies various categories of cities benefiting from a concentration of eds-and-meds jobs, such as older, slower-growing cities long established as major hubs for the industry, like Boston and Philadelphia. It also highlights up-and-coming markets where eds and meds are claiming a greater share of the local economy, such as in Riverside, Calif., Phoenix, Denver and Minneapolis.
Image courtesy of CBRE