The commercial real estate development industry grew at the strongest pace since the economic recovery began in 2011, according to “The Economic Impacts of Commercial Real Estate,” an annual state of the industry report from the NAOIP Research Foundation, Washington, D.C. Author Dr. Stephen S. Fuller, director of George Mason University Center for Regional Analysis, finds the economic impact attributable to nonresidential development, which rose 24 percent over the previous year—the largest gain since the sector began to recover in 2011.
Direct expenditures for 2013 totaled $124 billion, up from $100 billion the year before, and resulted in these contributions to the U.S. economy:
- Total impact on U.S. GDP reached $376.35 billion, up from $303.36 billion in 2012;
- Personal earnings (or wages and salaries paid) totaled $120 billion, up from $97 billion in 2012; and,
- Jobs supported (a measure of both new and existing jobs) reached 2.81 million in 2013, up from 2.27 million the prior year.
For the remainder of 2014 and into 2015, the report sees market figures continuing to rise, with year-over-year growth expected in the 8–15 percent range. Commercial real estate development has an immense ripple effect in the economy, authors contend, providing wages and jobs that quickly roll over into increased consumer spending. “Commercial development’s economic impact is tremendous; simply put, a healthy development industry is critical to a prosperous U.S. economy,” affirms NAIOP President Thomas Bisacquino. “As the uneven pace of the nation’s economic recovery continues, the industry seeks public policy certainty that bolsters investors’ and developers’ confidence. Despite this lack of assurance, we see positive indicators of a rebounding industry, but believe the industry could be more robust.”
The “Economic Impacts of Commercial Real Estate” tracks strength in four major segments of nonresidential building, while listing the top 10 states for project activity based on dollar volume. Comparing 2013 to prior year figures, it notes:
- Industrial development posted a year-over-year gain of 48.5 percent due mainly to groundbreaking of energy-processing facilities.
- Warehouse construction registered a third strong year of increased expenditures in 2013, gaining 38.1 percent in 2013. This is on top of 2012 growth of 28.4 percent and 2011 growth of 17.8 percent, showing a sustained increase in demand for warehousing space.
- Office construction expenditures rose for a second year in 2013, up 23.3 percent from 2012.
- Retail construction expenditures rose modestly for a third year in 2013, up 4.8 percent from 2012.
Top 10 states by construction value for Office, Industrial, Warehouse and Retail projects are Texas, Louisiana, New York, California, Iowa, Florida, Maryland, Georgia, West Virginia, and Oregon. Louisiana, Maryland, West Virginia and Georgia joined the leader list for 2013, displacing Illinois (11, this year’s rank), Ohio (14), Massachusetts (15) and North Carolina (18).
Posted at www.naiop.org/contributions2014, “Economic Impacts of Commercial Real Estate” includes detailed data on commercial real estate development activity in all 50 states, and also ranks the top 10 states specifically according to office, industrial, warehouse and retail categories.