On February 11, the Bureau of Labor Statistics released its January job numbers, noting that non-farm payroll employment increased by 130,000. In the same release, the BLS reported that, rather than the 584,000 jobs gained in 2025, the revised total was 181,000.
There were many reasons for the large number discrepancies, including delayed surveys from companies and even fewer companies answering the questionnaires. The main point is that the numbers make “2025 the weakest year for employment growth outside of a recession since 2003,” according to a recent article by Ryan Severino, BGO Chief Economist.
Nor was this a one-time issue. The BLS regularly revises its job numbers downward, well after the organization issues its preliminary, headline-making data. “If you look back at the last 48 monthly job releases, 38 of them were revised lower,” said Marcus & Millichap Vice President John Chang in a video entitled “Do Major Job Number Revisions Change the CRE Outlook?” He was also skeptical about the January jobs numbers. “If history teaches us anything, there’s a good probability that the number will be revised lower,” Chang said.
The Labor Upside
Severino said that the January job data kept the unemployment rate stable at 4.3%, indicating a continued tight labor market. Additionally, “yearly nominal wage growth of roughly 3.7% continues to outpace inflation,” which stood at 2.4% in January, he added.
Chang pointed out that while numbers declined, the U.S. is still creating jobs. “It’s just at a slower pace than we’ve experienced in the post-pandemic era,” he said.
Then, There’s CRE
The big question is whether the downward revisions will play havoc with the commercial real estate industry. Chang and Severino had somewhat different viewpoints regarding the four main sectors.
Apartments—Geographical and Job Differences
Chang explained that slower job creation will mean a drop in net absorption. “In markets where there has been considerable new development, the time it takes to fill those apartments will be longer than a lot of developers planned,” he said. The result could be ongoing concessions and sluggish rent growth in those regions.
On the other hand, many of the jobs created last year were in healthcare. “Robust healthcare hiring directly supports apartment demand,” Severino observed.
Office—An Increase in Usage
Severino explained that office-using industries “have shown little net hiring since early 2024,” a trend that has been consistent across office use and leasing.
However, Chang’s take was somewhat different, pointing out that the decline in professional and business services jobs could actually bolster space demand. “As prospective employees compete for fewer job openings, their willingness to commute to the office on a regular basis will continue to fuel a rising office attendance rate,” which could boost demand for office space in metros, he explained.
Retail—Still Growing, But Slowly
With retail tied to consumer spending, real wage growth has supported ongoing consumption, despite a flattening sales growth rate, according to Severino.
At the same time, that growth rate, combined with inflation-adjusted core-retail sales, led to a fairly stable retail outlook for 2026, “especially when you factor in the nominal pace of retail development,” Chang said.
Still, “retail employment has been largely flat, suggesting greater efficiency of space, which we have already observed,” Severino added.
Industrial—Continuing Normalization
Chang said that smaller infill industrial properties, along with small cities that evidenced minimal industrial development, are outperforming. The big-box industrial properties? Not so much. Those and “markets that have had a lot of development over the past few years generate a more moderate performance,” Chang said.
Meanwhile, Severino pointed out that manufacturing and related employment have also been flat since early 2024. This, in turn, is “reflecting easing demand and inventory normalization,” he added.
The Upshot
Severino and Chang agreed that the downgraded job revisions haven’t affected economic factors such as interest rates or future federal funds rate cuts. Also, the job numbers didn’t “materially change the commercial real estate investment outlook,” Chang pointed out.
At the same time, while the labor market isn’t contracting, it also isn’t expanding. But Severino explained that the issues impacting jobs in 2025 have abated, with January numbers supporting the concept of a stronger 2026.
“One month does not make a trend,” he commented. “But with lower inflation, lower interest rates, and less policy uncertainty, 2026 should see improvement versus 2025,” he said.
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