Commercial real estate is space for people to work in, live in, shop in, and store things in. As a result, competent commercial real estate professionals rely on a basic understanding of the demographics and economics associated with their local market. The typical high-level definition of a market is a county or a metropolitan statistical area.
The resulting report provides 72 lines of data and 13 categories in a contextual setting, increasing the meaning of individual data points by comparison to increasingly larger units of formal geography. As an example, the population of Polk County rose by 10.6 percent from April 2010 to July 2016, compared to 4.7 percent for the U.S. overall. Also, Polk County is growing about 10 percent faster than the state of Florida.
In addition to data about housing and households, median household income, mean travel time to work, and data about the economy and businesses is included. Finally, the U.S. Census has information about the size and density of the geography.
It also is important to understand employment in the MSA. The Bureau of Labor Statistics Economy at a Glance report provides an excellent overview at the North American Industry Classification System Super Sector level.
Again use Florida and Polk County as the case study and look at the report for Florida.
Employment on line 2 is household survey employment, which is the number of people who live in the geography and have a job.
Total nonfarm is listed as payroll or establishment survey employment, which refers to the number of people who work at businesses that are in Florida. The report provides jobs at the NAICS super-sector level, which is a grouping of the NAICS sector codes.
Take a look at Polk County, also the Lakeland-Winter Haven MSA. In conjunction with the Census QuickFacts report, this study allows the commercial real estate expert to articulate clearly and quickly the basic drivers of demand for real estate in the targeted geographic area.
The BLS Quarterly Census of Employment and Wages has a new tool called the QCEW Data Viewer, listing county, MSA, state, and national data by industry.
This data provides a closer look at employment in the geographic area, and it may be an alternative way to look at the BLS data for the county level since the Economy at a Glance focuses on MSAs.
To continue the example, select different employment categories for the NAICS subsectors in Polk County.
This report delves more in-depth about employment and adds the location quotient tool. By arranging the data in descending order for the location quotient column, this reveals that warehousing employment in Polk County is almost five times the national average. For more information refer to the QCEW Location Quotient Details.
Clearly in this market, industrial real estate is robust. Location quotient also can provide indications of other opportunities. For example, NAICS 713: Amusements employment is 50 percent higher than the U.S. average. This is attributable to the Legoland Theme Park in Winter Haven at www.legoland.com.
To summarize, the commercial real estate professional can use these three tools to quickly understand and articulate the high-level demographic and economic attributes of the local U.S. market they are analyzing.