News & Research Archive

Commercial Vacancy Rates and the Future of Jobs

Nov 09, 2012

Globe Street, a news service for the commercial real estate industry, ran an interesting poll recently asking: 'What do you make of the recent employment stats?' 14 percent of readers felt that the stats accurately reflected the recovery, 38 percent said stats were cooked for political purposes, 44 percent said that the stats don't give a fair picture of joblessness and 4 percent of readers don't pay attention to employment statistics. Following this question, Globe Street asked, 'Do you believe QE3 will help the Economy?' 65 percent responded with 'no', believing that it will only lead to more bluster and posturing. 19 percent believe that yes, QE3 will fight euro fears and tax concerns while 16 percent of readers believe that solutions are beyond them. These results are an indication of how little faith Americans have in our government's ability to get our economy up and running again. The poll is also telling with regards as to why many voters struggled to fully support President Obama the figures presented simply don't support a real economic improvement. It truly feels like the government is working under smoke and mirrors.

With the exception of only a few markets, including my own in San Francisco, commercial vacancy rates throughout the country remain flat and will remain flat until there is marked improvement in job growth. Historically, jobs increase when consumer spending increases. I believe with this recession/slow economic growth cycle we have been in for almost five years now, we should finally start to see consumer spending grow. Americans have held off replacing necessities for so long now that these items will soon have to be bought by most consumers. Car tires can't be driven on bald forever, a broken refrigerator just won't do. The start of our economic growth will come from simply relying on replacement purchases.

Retail and industrial properties are the first to see the benefits of consumer spending growth. The more consumers buy the more stores are supported - increasing the need for more warehouses where goods are kept and distributed. Office markets see benefits later in the growth cycle as support services such as advertising, banking, development etc. start to grow and support the retail sector growth.

There are two reasons why we have yet to see the upsides of this growth cycle. The first reason is that Americans wiped out all of their cash and reserves to survive this deep recession. Second, Americans are fearful that this recovery is unstable and as a result, are reluctant to spend until they feel secure in their current jobs and believe that the economy really is improving.

The major stumbling block we face is the deficit holes created by our government including local, state and federal. Taxes and revenue growth will come from all of us taking our much-needed cash from our pockets to keep government going. Don't fool yourself into thinking that taxing only the rich will solve our problems - the word 'rich' includes all of us and means more income taxes, sales taxes, property taxes and user fees. These taxes will dampen the natural growth of consumer spending and are the reason why poll results do not share the optimism of our President that we are on the road back and moving forward.


Written by: Hans Hansson


Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 27 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email or call him at (415) 765-6897. You may also check out his website,

Contact Us

Name must not be empty
Please provide a valid email
Message should not be empty


TCN Worldwide