Employment Revisions

Labor Market Revisions Shed New Light
on the Commercial Real Estate Outlook 

Employment data undergoes major recalibration.  Adjustments to federal labor statistics reveal a weaker job growth landscape than previously reported. 

• The Bureau of Labor Statistics released substantial downward revisions to the U.S. job creation totals for 2024 and 2025.
• The 2024 tally was revised from approximately 2.0 million jobs to about 1.46 million, while 2025 moved from 584,000 to roughly 181,000 positions.
• Although metro-level revisions are still pending, they are likely to push more major metros into negative territory for 2025.
• Large revisions reflect low employer response rates, early respondent bias, and difficulties in accurately modeling business openings and closings since the pandemic
• Of the last 48 monthly employment releases, 38 were subsequently revised lower. 
• January 2026 payroll growth of 130,000 appears optimistic and is likely to be revised downward.

Slow job growth to weigh on commercial real estate demand. If recent soft employment trends persist, they may moderate net absorption, particularly in the multifamily sector.

• Job creation is a primary demand driver for many property types across commercial real estate.
• Despite significant downward revisions, employment growth remains positive but slower than the post-pandemic pace, thereby moderating commercial real estate space demand.
• Softer hiring is likely to reduce multifamily net absorption and extend lease-up timelines in markets with elevated development pipelines.
• Oversupplied multifamily metros may expect persistent concessions and minimal, or potentially negative, change in rents until job creation strengthens.
• Conversely, apartment markets with limited recent construction are positioned for comparatively stable fundamentals, with steadier vacancy supporting modest rent gains.

Divergent property-sector trends emerge. Less hiring influences office, retail, and industrial performance in distinct ways, while the overall investment outlook remains steady.

• Slowing job creation and weakness in the professional and business services sector may reinforce rising office attendance as workers compete for fewer openings amid persistent return-to-office initiatives — supporting segment demand.
• Office absorption has remained positive for seven consecutive quarters, and softer labor conditions could extend this trend.
• Reduced job growth aligns with deceleration in inflation-adjusted core retail sales, up just 0.8 percent last year.
• However, the overall retail sector is expected to remain stable, supported by historically low levels of development.
• Industrial fundamentals are similarly stable, with smaller infill properties and low-supply metros continuing to outperform.
• Big-box industrial properties in supply-heavy metros are expected to generate a more moderate level of performance.
• The downward job revisions largely confirm existing market trends and have not materially altered rate-cut expectations or the broader investment climate.
• At the same time, recent price recalibration over the past few years continues to create opportunities for investors. 

* Preliminary estimate
Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.;
RealPage, Inc.