According to the Bureau of Labor Statistics’ January 2026 labor report, average hourly earnings increased by 3.7% year over year. With that statistic in hand, Marcus & Millichap’s Senior Vice President, John Chang, explained how that wage increase relates to commercial real estate.
In a recently released video, “How Wage Growth is Reinforcing CRE,” Chang began his discussion with apartment rents, noting that a 3.7% wage increase for a 40-hour-per-week job yields about $230 in additional monthly income. In the meantime, rents increased by 1.5% (or $28 a month). “Wages have been outpacing rent growth since the second quarter of 2023,” Chang said. While full-time employee wages have increased by about $700 on average, rent growth has increased by about $66 a month.
The result is that multifamily rents have been more affordable over the past few years, as measured as a percentage of income. “My point here is that, despite the rhetoric, the affordability of apartment housing has been getting better, not worse,” Chang commented. Additionally, higher unit deliveries in various markets have put downward pressure on rents.
Lower rents and higher wages have led to an increase in discretionary income, meaning “increased consumption, increased retail sales and increased savings,” Chang said. “American households’ ability to fuel consumption and economic growth remains positive.”
Chang was careful to point out that the numbers he provided were generalizations and averages. Not everyone experienced an income increase, while some consumers remain under pressure. Additionally, “there are bumps in the road, and low consumer sentiment is restraining spending to a degree,” he added.
But if and when consumer sentiment shakes off the gloom and doom, it could lead to greater consumption and economic growth, resulting in job creation and increased demand for housing and commercial space.
“Looking forward, I still see tremendous potential for improving commercial real estate fundamentals,” Chang said. “If and when consumer sentiment improves, that is the trigger that investors should be watching.”
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