September 8, 2016
How resilient are the 10 biggest metro areas in the U.S., and how would they perform in the face of another 2008-type recession? It turns out Los Angeles might fare quite well, while the same may not be said of markets such as San Francisco, Boston and New York, according to recent data analysis by CBRE Group, Inc.
Here’s how a “deep recession” scenario, featuring a one-time 1% negative shock to employment growth, might play out in each office market.
- In Boston, it could lead to a temporary drop in rent growth of as much as 2.6%, and a temporary vacancy rate increase of 515 basis points.
- In San Francisco, rent growth could slump by 3.4%, and vacancies could jump 905 basis points.
- In L.A., the same scenario would not result in a rent drop, and only a 123 basis point increase in vacancy rates.
CBRE’s Petra Durnin says, “The Los Angeles economy is much different today than it was during the previous peak.” Both employment base diversification and subdued new construction contribute to resiliency.
For comments, questions or concerns, please contact Dennis Kaiser