Q2 2012 Westchester, New York Commercial Real Estate Economy

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Q2 2012 Westchester, New York Commercial Real Estate Economy

The Lower Hudson Valley economy continued to improve slowly through the second quarter, but there seems to be little prospect of a boom in sight. According to Current Employment Survey (CES) from the U.S. Bureau of Labor Statistics (BLS), average total non-farm payroll employment in Westchester, Rockland, and Putnam Counties increased by 9,900 (1.7%) from July 2011 to July 2012, following an increase of 12,500 (2.2%) the previous 12 months. With the federal, state and local governments under fiscal pressure the Government sector lost 600 jobs (0.6%) in the year to July, but the private sector gained 12,400 (2.6%). Looking at Westchester County alone, household-based data from the BLS show an increase of just 4,300 (1.0%) in the number of employed residents of the county, including the self-employed and commuters to New York City and elsewhere. A densely developed, aging and affluent area, Westchester must increasingly draw its workforce from outside the county. Population growth, according to Moody’s Economy.com, is low at 5,740 people (0.6%) per year.

The office-based sectors continue to add jobs in the Lower Hudson Valley. According to CES data employment in the Financial Activities sector increased by 1,100 jobs (3.3%) in the year to July, while employment in the Professional and Business Services sector rose by 2,300 (3.1%). Within the latter sector, the Professional, Scientific, and Technical Services component showed the most rapid growth at 4.0% (1,300). At the industry level of detail Employment Services, which includes temporary workers, added 200 jobs (4.2%) year-over-year.

The sectoral distribution of employment in the Lower Hudson Valley shows its suburban, bedroom community character, with the Education and Health Services and Retail Trade sectors comprising an unusually large share of the jobs. The former sector was up by 4,400 jobs (3.8%) in the year to July, with the latter up by 2,500 (3.9%) including a gain of 700 (4.4%) in the Food and Beverage Store industry and 300 (4.2%) in the Clothing and Clothing Accessory Store industry. The Leisure and Hospitality sector added a strong 5,000 jobs (9.2%), with most of the gains in Food Services and Drinking places as more people felt wealthy enough to go out to eat. Retail and other consumer-related activities have benefitted by the high household average income here which, according to Moody’s Economy.com was up 3.1% year-over-year in the second quarter and had finally exceeded its year-end 2007 level (though it remains down significantly when adjusted for inflation).

The industrial sectors are relatively small here, and flat to slightly falling in employment. One exception is Construction and related sectors, which suffered a sharp drop of 2,300 jobs (6.9%) in the year to July after having gained 3,100 (10.3%) in the previous 12 months. There is little land left for additional single family housing in the Lower Hudson Valley, at the densities most communities there are prepared to accept. Most Construction sector employment is for renovation. The Great Recession and financial crisis put a temporary halt to revitalization projects in the area’s few older cities such as Yonkers, Mount Vernon, White Plains, and New Rochelle. As in Fairfield County, these older cities and in particular their downtowns and former industrial areas are the Westchester’s best opportunities for new construction.