Over the past 50 years, no major U.S. employment sector has grown as quickly (500%) or added more jobs (18.8 million—more than one out of every five) than the Education & Health Services industry (as defined by the U.S. Bureau of Labor Statistics industry sectors of Education Services and Health Care and Social Assistance).
Figure 1 ranks the 25 largest U.S. metropolitan areas (in terms of total employment) by
the Eds & Meds sector’s share of total local employment. Philadelphia, Boston and Pittsburgh have been at the top of this ranking for decades, trading the lead infrequently. The next three—New York, Baltimore and St. Louis—also show markedly higher concentrations. These six metros—the “Big 6”—contain many of the nation’s leading hospitals and institutions of higher education, and the sector holds significant influence in their local economies.
Multifamily and retail are the major CRE sectors that most directly benefit from an Eds & Meds presence, due to the relatively broad demand from education & health services workers for rental apartments and consumer purchases. In addition to being a growing source of demand for these real estate sectors, our research has discovered a more notable contribution: by providing a consistent source of employment growth across business cycles, Eds & Meds lowers volatility in multifamily and retail rents and vacancy.
We looked at how our 25 largest employment markets performed over the past two business cycles relative to their concentrations of Eds & Meds. To measure the volatility of a metro’s multifamily and retail market, we calculated its peak-to-trough decline in average rent during the past two recessions (2001 and 2007-2009), and then the number of quarters it took to re-achieve the peak.