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
Office Buildings | Oct 19, 2023
Proportion of workforce based at home drops to lowest level since pandemic began
The proportion of the U.S. workforce working remotely has dropped considerably since the start of the Covid 19 pandemic, but office vacancy rates continue to rise. Fewer than 26% of households have someone who worked remotely at least one day a week, down sharply from 39% in early 2021, according to the latest Census Bureau Household Pulse Surveys.
Luxury Residential | Oct 18, 2023
One Chicago wins 2023 International Architecture Award
One Chicago, a two-tower luxury residential and mixed-use complex completed last year, has won the 2023 International Architecture Award. The project was led by JDL Development and designed in partnership between architecture firms Goettsch Partners and Hartshorne Plunkard Architecture.
Giants 400 | Oct 17, 2023
Top 130 Sports Facility Architecture Firms for 2023
Populous, Gensler, HOK, and HKS head BD+C's ranking of the nation's largest sports facility architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Office Buildings | Oct 16, 2023
The impact of office-to-residential conversion on downtown areas
Gensler's Duanne Render looks at the incentives that could bring more office-to-residential conversions to life.
Giants 400 | Oct 11, 2023
Top 100 Industrial Sector Architecture Firms for 2023
Ware Malcomb, Arcadis, Stantec, and Gresham Smith top the ranking of the nation's largest industrial facility sector architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Products and Materials | Oct 10, 2023
‘Works with WELL’ product licensing program launched by International WELL Building Institute
The International WELL Building Institute (IWBI) recently launched the Works with WELL product licensing program. Works with Well certification allows manufacturers to demonstrate that their products align with WELL strategies.
Mass Timber | Oct 10, 2023
New York City launches Mass Timber Studio to spur more wood construction
New York City Economic Development Corporation (NYCEDC) recently launched New York City Mass Timber Studio, “a technical assistance program to support active mass timber development projects in the early phases of project planning and design.”
Government Buildings | Oct 10, 2023
GSA names Elliot Doomes Public Buildings Service Commissioner
The U.S. General Services Administration (GSA) announced that the agency’s Public Buildings Service Commissioner Nina Albert will depart on Oct. 13 and that Elliot Doomes will succeed her.
Esports Arenas | Oct 10, 2023
Modular esports arena attracts more than gamers
As the esports market continues to grow to unprecedented numbers, more facilities are being developed by universities and real estate firms each year.
Higher Education | Oct 10, 2023
Tracking the carbon footprint of higher education campuses in the era of online learning
With more effective use of their facilities, streamlining of administration, and thoughtful adoption of high-quality online learning, colleges and universities can raise enrollment by at least 30%, reducing their carbon footprint per student by 11% and lowering their cost per student by 15% with the same level of instruction and better student support.
