Talk to most people in the industry about the state of theeconomy and business growth, and the number-one lament is about thelack of job growth. Of course, employment is the driver behindspace absorption across all sectors. Jobs fill office space.Without jobs, people can’t spend money in retail stores. Or payrent.

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But in terms of employment, the multifamily sector seems to bein a good position at this stage on the cycle. Unemployment maystill be an issue in most markets across the US, but for youngadults—the prime renter cohort—more jobs are becomingavailable.

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That was the recurring observation made by most folks I spokewith at last week’s RealShare Apartments 2010 Conferencein Los Angeles. When asked about job growth, many property ownersand operators shared that even in weak markets, their renters arefinding jobs. Anecdotal and factual evidence shared in bothconversations and panel sessions during the conference show thatoccupancies for traditional apartments in most metros are rising,thereby allowing for rent growth as well.

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That helps to explain why we’re seeing absorption in the face ofslow job growth. According to M/PF Research, the number of occupiedmultifamily units in the 64 major metros tracked by the companyrose in the first quarter by 215,000. That figure is almost twicewhat was absorbed in all of 2009, and helped to bring the midyearvacancy rate to 6.6%. from 8.2% at year-end 2009.

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Employment has been on a gradual uptick for several months, andalthough the unemployment rate for those aged 20 to 34—the primerenter cohort—has been higher than older generations, job growthfor that group has been at a slightly brisker pace. A look atBLSdata illustrates this point.

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At the end of 2009, the unemployment rates for the 35- to44-year-old group was 7.9%, those 45- to 54-years-old had a 7.2%,and for 55- to 64-year-olds, the rate was 6.6%. Look at the numbersfrom September 2010, however, and the unemployment rates for thosecohorts actually rose or flatlined: 8.1% for the 35 to 44 group,7.1% to the 45 to 54 group and 7% for the 55 to 64 group.

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If you look at younger generations, however, the trend isclearly reversed. Americans between the ages of 20 and 24 saw theirunemployment rate go from 14.7% at year-end 2009 to 14.6% inSeptember, but the next group—those aged 25 to 34—saw unemploymentdecrease by 40 basis points during that period, to 9.5% last month.That’s the greatest change any age group saw during the first ninemonths of the year.

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In addition to job growth, I’ve been hearing that more youngadults are moving out of their parents’ homes into apartments oftheir own, often with the help of their parents. Whether this is anindication of economic confidence or that parents have become fedup with their mooching children, though, remains to be seen.

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Apartment market performance is also a matter of location. Ofcourse, the high-barrier-to-entry coastal cities tend to outperformothers, but in this environment, it’s probable that young adultsseeking employment will go to where the jobs are. So if Kiplinger is right, the top 10US cities that may see an influx of young adults over the nextdecade are scattered across the country: Austin, TX; Charlotte, NC;Chicago; Houston; Kansas City, MO; Lansing, MI; New York City;Portland, OR; Salt Lake City; and Washington, DC. Selection,according to Kiplinger, was based on available jobs in growthsectors (unemployment rates ranged from 6% to 10.9%), as well asbelow-average costs of living and median monthly rents, includingutilities around or below the national average of $819 (in mostcases)—among other factors.

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So for you owners and operators out there, do these stats andobservations hold true? Are you seeing occupancies, or at leasttraffic, rise? Have you been able to raise rents on renewals andturnovers, even in “tough” markets? Or are we being toooptimistic?

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