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
High-rise Construction | Feb 23, 2024
Designing a new frontier in Seattle’s urban core
Graphite Design Group shares the design for Frontier, a 540,000-sf tower in a five-block master plan for Seattle-based tech leader Amazon.
Construction Costs | Feb 22, 2024
K-12 school construction costs for 2024
Data from Gordian breaks down the average cost per square foot for four different types of K-12 school buildings (elementary schools, junior high schools, high schools, and vocational schools) across 10 U.S. cities.
MFPRO+ Special Reports | Feb 22, 2024
Crystal Lagoons: A deep dive into real estate's most extreme guest amenity
These year-round, manmade, crystal clear blue lagoons offer a groundbreaking technology with immense potential to redefine the concept of water amenities. However, navigating regulatory challenges and ensuring long-term sustainability are crucial to success with Crystal Lagoons.
Architects | Feb 21, 2024
Architecture Billings Index remains in 'declining billings' state in January 2024
Architecture firm billings remained soft entering into 2024, with an AIA/Deltek Architecture Billings Index (ABI) score of 46.2 in January. Any score below 50.0 indicates decreasing business conditions.
University Buildings | Feb 21, 2024
University design to help meet the demand for health professionals
Virginia Commonwealth University is a Page client, and the Dean of the College of Health Professions took time to talk about a pressing healthcare industry need that schools—and architects—can help address.
AEC Tech | Feb 20, 2024
AI for construction: What kind of tool can artificial intelligence become for AEC teams?
Avoiding the hype and gathering good data are half the battle toward making artificial intelligence tools useful for performing design, operational, and jobsite tasks.
Engineers | Feb 20, 2024
An engineering firm traces its DEI journey
Top-to-bottom buy-in has been a key factor in SSOE Group’s efforts to become more diverse, equitable, and inclusive in its hiring, mentoring, and benefits.
Building Tech | Feb 20, 2024
Construction method featuring LEGO-like bricks wins global innovation award
A new construction method featuring LEGO-like bricks made from a renewable composite material took first place for building innovations at the 2024 JEC Composites Innovation Awards in Paris, France.
Codes and Standards | Feb 20, 2024
AISC, AIA release second part of design assist guidelines for the structural steel industry
The American Institute of Steel Construction and AIA Contract Documents have released the second part of a document intended to provide guidance for three common collaboration strategies.
Student Housing | Feb 19, 2024
UC Law San Francisco’s newest building provides student housing at below-market rental rates
Located in San Francisco’s Tenderloin and Civic Center neighborhoods, UC Law SF’s newest building helps address the city’s housing crisis by providing student housing at below-market rental rates. The $282 million, 365,000-sf facility at 198 McAllister Street enables students to live on campus while also helping to regenerate the neighborhood.