A Cushman & Wakefield Research Publication - 2017 Global Forecast

GLOBAL

AMERICAS

APAC

APPENDIX

EUROPE

IT’S ALL ABOUT JOBS Ironically, in some areas, the prolonged consistency in the labor markets might ultimately be what slows demand for office space. After eight years of continued expansion, albeit a slow one, some of the world’s labor markets have tightened substantially, making it difficult for businesses to fill open positions. In the U.S., the unemployment rate fell to 4.4% in June of 2017, fully back to pre-recession levels. At the same time, wage pressures are rising. The unemployment rate in Canada is expected to decline from 7.0% in 2016 to 6.6% in 2017—the best year of the cycle by far. Mexico’s unemployment rate is expected to register 3.5% (nationally) in 2017 and remain below 4% through 2018. In the Asia Pacific

region, unemployment is now 20 BP lower than at the peak of the last cycle. Europe’s recovery, which has generally lagged that of the other regions, has a bit more labor slack. But even so, certain cities such as London and Berlin have unemployment rates that are at near record lows. Thus, many parts of the world are nearing fuller employment. This does not mean that job creation will end. Many cities still have room to run until full employment is achieved. Even at that point, population growth and migration will continue to support employment growth in most places. But tighter labor markets does mean that job growth will generally be on a decelerating path from this point forward, particularly in tech and Tier-1 cities, where labor shortages are the most acute. With this in mind, a changing of the guard should be expected: Tier-2 cities will emerge as the new growth leaders in the cycle as businesses expand into markets where workers are easier to find and less expensive to hire. To be clear, Tier-1 cities will still continue to contribute the lion’s share of all jobs created worldwide due to their sheer size. But it is the Tier-2 cities that are still generally accelerating. When we add it all up, the world economy will create 9.9 million net new office-using jobs over the next three years, down from the 10.7 million created in the prior three years, but still solid.

OFFICE-USING JOB GROWTH

4 6 8 10 12

Millions

0 2

Europe

Americas

*APAC

Global

Last 3 Years (2014-2016) Next 3 Years (2017-2019)

Source: Oxford Economics, Moody’s Analytics, Cushman & Wakefield Research *Greater China cities include new full-time employees in the services sector.

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