U.S. Commercial Real Estate Development Supported 3.2 Million Jobs and Contributed $450 Billion to the Economy in 2015

Individual State Data Included in Report naiop.org/contributions2016

WASHINGTON, D.C. – (RealEstateRama) — State Data Included in Report naiop.org/contributions2016Development and construction of new commercial real estate – office, industrial, warehouse and retail – continues to be a powerful contributor to the U.S. and individual state economies, supporting approximately 3.2 million American jobs and contributing $450 billion to U.S. GDP in 2015, according to a new report released by the NAIOP Research Foundation.

Highlights from the “Economic Impacts of Commercial Real Estate, 2016 Edition” include:

  • Commercial real estate development supported 3.2 million American jobs in 2015 (a measure of both new and existing jobs).
  • Commercial real estate development contributed $450 billion to U.S. GDP.
  • There were 429.4 million square feet of commercial real estate space built in 2015, with capacity to house 1.1 million new workers.

Download the full report.

“Commercial real estate continues to bring new jobs, improve infrastructure, and create places to live, work and play,” said Thomas Bisacquino, NAIOP president and CEO. “This is positive news both for the industry and the nation, but clarity on budget policy and tax reform following the presidential election will provide more certainty and add to the confidence of developers and investors.”

Looking ahead, the report says forecasts for 2016 project accelerating construction spending, with gains in fixed investment in commercial structures, such as office, retail, health care and distribution facilities being partially offset by cutbacks in energy-related construction expenditures.

The report’s author, economist Stephen S. Fuller, Ph.D., Dwight Schar Faculty Chair, university professor, and senior advisor and director for special projects of the Center for Regional Analysis at George Mason University, stated in the report:

“With the direct and indirect impact of construction spending on the U.S. economy (GDP) in 2015 totaling $3.2 trillion and accounting for 17.8 percent of GDP, the continuing growth of construction spending that began in 2011 will provide continuing support to the economy’s growth rate during the next several years. That is, the growth rate for construction spending will exceed the GDP growth rate annually for at least the next five years.”

The 2015 U.S. GDP contribution of $450 billion is down slightly from the 2014 contribution, attributable to a decline in energy prices that deterred the construction of new energy facilities and updated multipliers, revised by the U.S. Department of Commerce Bureau of Economic Analysis (BEA), that reflect greater technological efficiencies resulting in fewer workers.

Summary of Construction Spending (Hard Costs) by Product Type:

  • Office construction expenditures increased by 3.0 percent in 2015, building on its strong gain of 29.8 percent in 2014.
  • Retail construction expenditures experienced a strong gain in 2015, up 8.2 percent from 2014, when it registered a 1.1 percent gain.
  • Warehouse construction registered a fifth strong year of increased expenditures in 2015, gaining 10.8 percent.
  • Industrial construction spending decreased sharply in 2015, falling 46.2 percent, following a very strong gain in 2014, when it increased 74.2 percent. This pullback in industrial/manufacturing construction in 2015 can be attributed to the downturn in the energy sector and a slowdown in global demand for U.S. manufactured goods.

Top 10 States by Construction Value

Jobs supported and income generated by annual building operations represent a continuing flow of expenditures into local, state and national economies that extend over the life of the structures. Jobs and output associated with the new construction generate significant annual economic and fiscal benefits (e.g., tax revenues) on the state level that are significant to the overall economy’s growth. The following are the top states by construction value per product type:

Top 10 States by Construction Value for Office

State
Direct Spending
(in billions of dollars)
Jobs Supported
2014 Ranking
1. New York $16.994 194,668 3
2. Texas $6.353 106,800 2
3. California $3.138 46,263 1
4. Iowa $2.570 37,861 5
5. Illinois $2.373 36,646 7
6. Washington $1.893 27,039 8
7. Massachusetts $1.753 21,118 6
8. Colorado $1.447 24,703 Not ranked.
9. Ohio $1.352 22,363 Not ranked.
10. South Carolina $1.285 23,052 Not ranked.

Top 10 States by Construction Value for Warehouse

State
Direct Spending
(in billions of dollars)
Jobs Supported
2014 Ranking
1. Texas $2.724 46,041 1
2. California $2.566 37,756 2
3. Florida $1.395 24,574 5
4. New York $1.395 12,837 Not ranked.
5. Pennsylvania $0.983 14,524 4
6. Illinois $0.966 14,888 7
7. New Jersey $0.949 12,549 3
8. Ohio $0.696 11,497 9
9. Georgia $0.693 12,546 8
10. North Carolina $0.620 11,082 Not ranked.

Top 10 States by Construction Value for Retail

State
Direct Spending
(in billions of dollars)
Jobs Supported
2014 Ranking
1.New York $4.850 55,593 3
2. Texas $4.402 74,061 1
3. California $3.694 54,515 2
4. Florida $2.900 51,293 4
5. Ohio $1.346 22,271 8
6. Illinois $1.252 19,361 5
7. Pennsylvania $1.073 15,857 7
8. North Carolina $1.036 18,531 6
9. Virginia $.951 13,281 Not ranked.
10. Tennessee $0.922 14,725 Not ranked.

The full report includes detailed data on commercial real estate development activity in all 50 states, including the direct spending; total output; salaries and wages; and jobs supported.

An executive summary and the full report is online: naiop.org/contributions2016

 

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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 18,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.

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