Source: NAOIP, The Commercial Real Estate Development Association, Washington, D.C.
In 2014, office, retail, health care and distribution facility developers logged their best year since 2007, and saw overall commercial real estate industry economic contributions jump 40 percent from the prior year—the largest gain since market recovery began in 2011. The upbeat figures are part of the NAIOP Research Foundation’s annual state of the industry report, “The Economic Impacts of Commercial Real Estate.”
Direct commercial real estate development expenditures for 2014 totaled $174 billion, up from $124 billion the year before, and resulted in solid, year over year gains in key indicators: $528 billion total gross domestic product contribution, up from $376 billion; personal earnings (or wages and salaries paid) totaling $168 billion, up from $120 billion; and, jobs supported (a measure of both new and existing positions) reaching 3.9 million, up from 2.8 million.
“The industry is getting back to full health and making an even bigger contribution to our national economy, but it still has plenty of room to grow. Office and industrial were very strong and we believe the activity in these areas will keep accelerating,” says NAIOP CEO Thomas Bisacquino. “We hope Congress can agree on a bipartisan infrastructure investment package and continues to provide incentives for capital investment to keep the job creation going strong.
“Economic Impacts” authors cite projections for accelerated 2015 construction spending, with single-digit, fixed investment gains in commercial structures such as office, retail, health care and distribution facilities. As commercial construction continues to expand, the U.S. economy’s growth rate is projected to increase from 2.4 percent in 2014 to 3.0 percent this year, and continue upward through at least 2020.
By category type, the report finds 2014 construction expenditures increasing in: a) office by 29.8 percent, extending a 2013 gain of 23.3 percent; b) retail by 1.1 percent, a slight bump from a 4.8 percent gain in 2013; and, c) warehouse by 19.7 percent, marking a fourth strong year as indicated in 17.8 percent, 28.4 percent and 38 percent annual gains, respectively, from 2011–2013.
“Economic Impacts” also ranks the top 10 states by value of direct office, industrial, warehouse and retail development expenditures: Texas ($42 billion), California ($13.4 billion), New York ($10.5 billion), Louisiana ($6.4 billion), Nevada and Pennsylvania ($6 billion), Florida ($5.8 billion), Washington ($5 billion), Illinois ($4.9 billion) and Ohio ($4 billion). An executive summary or full report can be obtained here.