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
| Apr 5, 2011
Top 10 Buildings: Women in Architecture
Making selections of top buildings this week led to a surprising discovery about the representation of women in architecture, writes Tom Mallory, COO and co-founder, OpenBuildings.com. He discovered that finding female-created architecture, when excluding husband/wife teams, is extremely difficult and often the only work he came across was akin to interior design.
| Apr 5, 2011
What do Chengdu, Lagos, and Chicago have in common?
They’re all “world middleweight cities” that are likely to become regional megacities (10 million people) by 2025—along with Dongguan, Guangzhou, Hangzhou, Shenzhen, Tianjin, and Wuhan (China); Kinshasa (Democratic Republic of the Congo); Jakarta (Indonesia); Lahore (Pakistan); and Chennai (India), according to a new report from McKinsey Global Institute: “Urban World: Mapping the economic power of cities”.
| Mar 30, 2011
China's low-carbon future city
In 2005, the Chinese government announced its target to reduce energy consumption per GDP unit by 20% by the year 2010. After a multi-billion investment, that target has been reached. The Chinese Climate Protection Program’s goal to increase energy efficiency, develop renewable energies, and promote energy savings while reducing pollutant emissions and strengthening environmental protection is reflected in the “Future City” by SBA Design.
| Mar 30, 2011
Is the AEC industry at risk of losing its next generation leaders without better mentoring?
After two or three horrifying years for the AEC industry, we are finally seeing the makings of a turnaround. However, data developed by Kermit Baker as part of the AIA Work-on-the-Boards survey program indicates that between 17% and 22% of design firms are eliminating positions for interns and staff with less than six years of experience. This data suggests the industry is at risk of losing a large segment of its next generation of leaders if something isn't done to improve mentoring across the profession.
| Mar 29, 2011
City's design, transit system can ease gas costs
Some cities in the U.S. are better positioned to deal with rising gas prices than others because of their design and transit systems, according to CEOs for Cities, a Chicago-based nonprofit that works to build stronger cities. The key factor: whether residents have to drive everywhere, or have other options.
