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HFF MSA Employment Report December 2015

Friday, February 05, 2016

HFF is pleased to report on the latest MSA employment expansion statistics from the year 2015. Our research team analyzes trends and data to give readers a better view into the current state of the economy and how employment is being affected.

Growth Rankings

The large MSAs of New York, Los Angeles, Dallas-Fort Worth, Atlanta and San Francisco top the list of employment creation over the past year. Only the top two MSAs were able to create more than 100,000 jobs. Houston has dropped to 29th as its rate of expansion continues to deteriorate.

MSA Growth Rankings

Employment in HFF markets grew by 1.1 million in the past 12 months, as HFF maintained a presence in seven of the top 10 growth markets. HFF markets accounted for 40.9 percent of all growth. The top 10 expanding employment bases at left combined to account for ~30.2 percent of the nation’s overall growth in the past year. Continued compression in this percentage underpins the concept that job growth is becoming more prevalent nationwide, particularly in smaller markets.

Altering our perspective to percentage growth (to level the playing field), we see that Riverside and Atlanta remain in the top 10. Large markets such as Houston, New York and Chicago now appear to lag, given their respective percentage growth rates below the median of 2.12 percent. Alternatively, smaller markets such as San Jose, Portland and Austin show their momentum, with each growing above 3.5 percent. With the exception of San Jose, which is on an absolute tear (!), “STEM” markets, which led the nation’s job recovery, are slowly descending the rankings in favor of lesser-favored geographies such as Orlando, Charlotte, Nashville and Atlanta on tourism, finance and shipping/logistics.

MSA Growth Rankings Percentage

Again, San Jose (4.44 percent) is clearly the jewel of the country, this time adding a healthy level of employment to marry attractive technology company valuations. This isn’t the tech-bubble most remember from the turn of the millennium. Employment in HFF markets grew by 2.04 percent in the 12 months ended December 2015 and, having added 1.1 million jobs on the year, accounting for 40.9 percent of the nation’s headline growth. The employment recovery is definitely still underway, with approximately 28 markets now expanding at a rate in excess of 2 percent.

Employment Growth Since Troughing

Since bottoming in the depths of the recession, many markets have bounced back significantly, with 35 markets having created more than 100,000 jobs. New York City (1,106,100) has created the highest level of job creation since bottoming. Combined, the below markets have expanded by 11.12MM jobs (15.2 percent) since troughing. For many markets, there is still work left to do, but each market below has indeed commenced its recovery.

MSA Employment Growth

Changing our perspective to percentage job growth since troughing, the smaller employment bases slide to the left of the graph. Markets with ~1 million employed such as San Jose, Austin and Nashville have expanded significantly. In the cases of San Jose, Austin and Nashville, the local employment bases have grown by nearly one-quarter since bottoming in 2009. Houston and San Francisco are the exceptions to the rule, each expanding by more than 20 percent since bottoming in spite of the sizable employment bases. Once more, “STEM” markets have driven outperformance in the new expansionary cycle.

MSA Employment Growth Troughing

Recovering From The Great Financial Crisis

In Texas, relatively small contractions experienced during the downturn paired with outsized job growth since propel the largest MSAs in that state to the top four spots of the below graph, representing recuperation of jobs lost after the Great Financial Crisis. Note that Austin has now created 6.07 times the number of jobs lost during the recession. Said another way, if Austin lost 100 jobs during the recession, they’ve added back approximately 607. Some highly-favored investment markets such as Chicago, Philadelphia and Phoenix are still struggling to recuperate.

MSA Recovery

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