The commercial real estate development industry grew at the strongest pace since the economic recovery began in 2011, according to an annual report on the state of the industry released today by the NAIOP Research Foundation.
The report, entitled “The Economic Impacts of Commercial Real Estate,” determined that the economic impact realized by the development process rose a significant 24.06% over the previous year, the largest gain since the market began to recover in 2011.
Direct expenditures for 2013 totaled $124 billion, up from $100 billion the year before, and resulted in the following economic contributions to the U.S. economy:
- Total contribution to U.S. GDP reached $376.35 billion, up from $303.36 billion in 2012;
- Personal earnings (or wages and salaries paid) totaled $120.02 billion, up from $96.75 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 year before.
The report says that the outlook for the remainder of 2014 and into 2015 is that the figures will continue to rise, with year-over-year growth expected in the range of 8-15%.
Commercial real estate development has an immense ripple effect in the economy, 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,” said Thomas J. Bisacquino, NAIOP president and CEO. “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.”
Industrial, Warehousing, Office and Retail Show Strong Gains:
- 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.
Operations and Maintenance Surge Even As Building Owners Cut Costs With Energy Efficiencies and New Technologies
Through increased energy efficiency and advanced technology, building owners cut the average per-square-foot cost of operating building space in the U.S. by 14 cents, from $3.20/square foot to $3.06/square foot. Still, maintaining and operating the existing 43.9 billion square feet of commercial real estate space resulted in $134.3 billion of direct expenditures, and resulted in the following economic contributions to the U.S economy:
- Total contribution to GDP in 2013 $370.9 billion;
- Personal earnings (wages and salaries) totaled $116.8 billion; and
- Jobs supported, 2.9 million.
Top 10 States by Construction Value for Office, Industrial, Warehouse and Retail:
1. Texas
2. Louisiana
3. New York
4. California
5. Iowa
6. Florida
7. Maryland
8. Georgia
9. West Virginia
10. Oregon
Four new states joined the list: Louisiana, Maryland, West Virginia, and Georgia. These states made the top ten list due predominantly to development of highly specialized and expensive energy-related processing facilities. Illinois, Ohio, Massachusetts, and North Carolina dropped off the top 10 list, slipping to Nos. 11, 14, 15 and 18 respectively.
The report 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.
The report is authored by Dr. Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, and funded by the NAIOP Research Foundation.
An executive summary and the full report is online: www.naiop.org/
Related Stories
Reconstruction & Renovation | Mar 28, 2022
Is your firm a reconstruction sector giant?
Is your firm active in the U.S. building reconstruction, renovation, historic preservation, and adaptive reuse markets? We invite you to participate in BD+C's inaugural Reconstruction Market Research Report.
Legislation | Mar 28, 2022
LEED Platinum office tower faces millions in fines due to New York’s Local Law 97
One Bryant Park, also known as the Bank of America Tower, in Manhattan faces an estimated $2.4 million in annual fines when New York City’s York’s Local Law 97 goes into effect.
Healthcare Facilities | Mar 25, 2022
Health group converts bank building to drive-thru clinic
Edward-Elmhurst Health and JTS Architects had to get creative when turning an American Chartered Bank into a drive-thru clinic for outpatient testing and vaccinations.
Higher Education | Mar 24, 2022
Higher education sector sees 19 percent reduction in facilities investments
Colleges and universities face a growing backlog of capital needs and funding shortfalls, according to Gordian’s 2022 State of Facilities in Higher Education report.
Architects | Mar 16, 2022
James Hoban: Designer and builder of the White House
Stewart D. McLaurin, President of the White House Historical Association, chats with BD+C Executive Editor Robert Cassidy about James Hoban, the Irish draftsman and builder who convinced George Washington to let him design and build the White House.
Architects | Mar 16, 2022
Diébédo Francis Kéré named 2022 Pritzker Architecture Prize recipient
Diébédo Francis Kéré, architect, educator and social activist, has been selected as the 2022 Laureate of the Pritzker Architecture Prize, announced Tom Pritzker, Chairman of The Hyatt Foundation, which sponsors the award that is regarded internationally as architecture’s highest honor.
Architects | Mar 10, 2022
Gyo Obata, FAIA, HOK Founding Partner, passes away at 99
Obata's career spanned six decades and included iconic projects like the National Air and Space Museum in Washington, D.C., and Community of Christ Temple in Independence, Mo.
AEC Tech Innovation | Mar 9, 2022
Meet Emerge: WSP USA's new AEC tech incubator
Pooja Jain, WSP’s VP-Strategic Innovation, discusses the pilot programs her firm’s new incubator, Emerge, has initiated with four tech startup companies. Jain speaks with BD+C's John Caulfield about the four AEC tech firms to join Cohort 1 of the firm’s incubator.
Architects | Mar 2, 2022
FGM Architects and LeMay Erickson Willcox Architects join forces
FGM Architects announced that LeMay Erickson Wilcox Architects, a 19-person architectural studio based in Reston, VA is joining their firm.
Architects | Mar 1, 2022
Alyson Steele Elected President and CEO of Quinn Evans
(2.25.22) Alyson Steele, FAIA, LEED AP, has been elected president and chief executive officer of Quinn Evans, a nationally recognized firm providing architecture, planning, interior design, landscape architecture, and historic preservation services. Steele has been with the firm since 1997 and previously served as executive vice president and chief design officer. She succeeds Larry Barr, FAIA, who will continue to serve on the board of directors.