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The Investment Outlook For Major Property Markets - Q2 2013

Global Head of Research Doug Herzbrun is often asked to pinpoint the key factor that drives the property markets.  His invariable answer – employment growth.  Jobs fill office space.  Jobs drive household formation and thus residential demand.  Jobs drive income growth, generate retail sales, and put inventories into warehouses.  To gauge the fundamental demand for real estate, look at employment trends.  The problem with employment is that it’s typically a lagging indicator.  As economic activity picks up, firms often work their existing employees harder and longer before they add new ones.  Likewise, they backfill underutilized offices and warehouses before committing to expanded facilities.  Jobs are key, but other leading indicators are more prescient.  Lately, his answer to this question has evolved to…