Booming job growth reaches 108,000 in 2018
Job growth increased 72% year-over-year totaling 108,300 jobs in 2018. Professional & business services, construction, and manufacturing recorded the highest annual job growth totals. Also of note, the energy sector had the highest annual job growth since 2013, creating 4,500 jobs, a much welcomed sign after several years of negative or flat growth.
Year-end quarterly absorption was the strongest in three years, bringing overall annual totals to 546,600 SF. Class A properties drove absorption, bringing annual numbers into positive territory at 996,500 SF. Class B continues to be impacted by the flight to quality that is pervasive throughout the market, with negative absorption of 1,568,240 SF.
Vacancy improves for second straight quarter
Fourth quarter activity saw continued improvement across the market as direct vacancy fell for the second consecutive quarter and availability also saw a decline. Direct vacancy declined 20 basis points to 16.3% for all classes of property. Class A was the primary beneficiary of activity as the property group posted the largest quarterly decline since 2010, down 70 basis points to 15.4% (flat year-over-year). Class B increased 50 bps over the quarter (up 100 basis points year-over-year), to 18.4%.
Portfolio activity decreases
Annualized sales volume was also down (-45%) from a banner year in 2017 which saw several major portfolios change hands. While investment activity was subdued over the course of 2018, investor interest remains elevated given the strong fundamentals and rapid growth of the market. That said, the current spread between bid and ask has seen investors waiting for this delta to reduce before moving forward. Activity should pick back up in 2019 as both off-market and on-market transactions pique inves-tors’ interest as they look to expand their portfolios.