In this blog, we will cover employment trends across the United States, employment at the local level in Spartanburg, S.C., and how employment trends are impacting office space.
Low Unemployment Rates and Employment Challenges
According to the Bureau of Labor Statistics, the current unemployment rate is 3.6%, which is relatively low considering an unemployment rate between 4-6% is healthy. The lowest unemployment rate recorded is 2.5% in May of 1953.
What are the Current Challenges in the Job Market?
In 2022, fifty million workers quit their job.
The reasons for quitting vary but the high quit rate is largest attributed to finding a better work/ life balance or finding a better opportunity.
Since 2020, hiring rates have outpaced quit rates; there are some industries that have been especially impacted with employment challenges.
One of the industries that has struggled to retain employees is leisure and hospitality. Leisure and Hospitality has had the highest hiring rate of any industry since late 2020. The quit rate was 4.9% as of May 2023. Leisure and Hospitality has the highest unemployment rate of any industry at 5.1%
While some industries have experienced high quit rates, others have maintained a lower quit rate. The lowest quit rate industry is financial activities at 1.5%. Financial Activities has the lowest unemployment rate of any industry at 2.2%.
There have been substantial layoffs in some sectors such as tech, luxury goods, auto, and entertainment with 170,000 layoffs in these industries as of late May 2023.
Employers are facing challenges because of the miss match between employee talent and job demand and the rising expectations among employees.
Working From Home
One challenge in the job market over the past few years has been the increase in pressure on employers to offer more flexible work options.
According to Gallop, 91% of US workers now want to continue to work at a minimum partially from home. Over 33% of employees said they would find another job before returning to the office.
Labor Market in Spartanburg, South Carolina
Now that we know the national landscape of the labor market, how does Spartanburg, S.C compare?
Over View
In The Upstate of S.C., the labor force is 711,150 with 22,003 graduates as of May 2020.
The unemployment rate in the Mauldin/Greenville/Spartanburg area is 2.3% with a labor force participation rate of 65.1% for males and 50.6% for females.
The largest industries in Spartanburg are manufacturing (20.3% of the total work force), health care/social assistance (12.1% of the work force), and retail trade (10.4% of the work force).
White collar jobs make up 53.6% of all jobs while blue collar jobs make up 30.7%, and services comprise 15.7% of all jobs.
How Employment Challenges and Trends Impact Office Space
Now that we have covered some basic employment trends across the United States and locally in Spartanburg, how will they impact office space now and in the future?
A recent report by McKinsey & Co was released that studied the nine “superstar cities” in the world that contributed the most to the worlds GDP and growth.
The nine cities were Beijing, Houston, London, New York City, Paris, Munich, San Francisco, Shanghai, and Tokyo.
The report stated that office is down 30% relative to pre covid levels, and that a hybrid between office and work from home were here to stay. The study says that a “Moderate Scenario” in 2029 is that office demand is 13% below 2019 levels.
Can We Expect to See These Trends in the United States Specifically? How about in Spartanburg?
United States
In the United States, there is 8.4 billion square feet of office inventory, and the current vacancy rate is 13%.
This 37% percentage change in vacancy rates from the 2019 vacancy rate of 9.5%.
Office vacancy is projected to rise to 16.3% in 2024, and it is projected to be 17.5% by 2028.
Therefore, the future of office space in the US is not projected to look so great.
As employers continue to offer the option to work from home or a hybrid option to be competitive, office space will not be as relevant as it once was.
Spartanburg, S.C.
In Spartanburg, S.C. there is 7.8 million square feet of office inventory, and the current office vacancy rate is well below the national level at 5%.
In fact, there has only been a small increase from the 2019 office vacancy rate of 4.4%.
Office vacancy in Spartanburg is projected to rise slightly over the next five years. The projected 2028 vacancy rate is 6.3%. This is a much lower vacancy than the projected national average vacancy of 17.5% in 2028.
Conclusion
While the COVID 19 pandemic may seem to be in the rearview mirror, some of the habits born out of the pandemic are here to stay.
The main factor impacting office space is the work from home or hybrid trend.
Office vacancy rates across the United States are expected to remain high according to Costar’s five year projections. In Spartanburg, S.C., office vacancy rates have not been impacted as significantly and are projected to rise mildly from the current rate of 5% to 6.3% by 2028.
If you’d like to discuss this blog or anything related to commercial real estate, let’s connect!
Emma McDaniel
emma@mcdanielandco.com
864-576-4660, Office
Sources
Costar Data
Shining a new light on modern HR challenges | theHRD (thehrdirector.com)
SAE Home Page : U.S. Bureau of Labor Statistics (bls.gov)
Employment Situation Summary – 2023 M06 Results (bls.gov)
United States Unemployment Rate – June 2023 Data – 1948-2022 Historical (tradingeconomics.com)
Workforce – Upstate SC Alliance
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