Commercial real estate development supported 6 million jobs and contributed $861 billion in 2016
Development, construction and ongoing operations of new commercial real estate in the U.S. supported 6.25 million American jobs and contributed $861 billion to the country’s GDP in 2016, according to an annual study published by a national commercial real estate group.
In Virginia, the study put the total economic impact at $7.2 billion and 51,442 jobs.
The “Economic Impacts of Commercial Real Estate,” done annually since 2008 by the research foundation of NAIOP (National Commercial Real Estate Development Association), uses key data sets from the U.S. Census Bureau and Dodge Data & Analytics (formerly McGraw-Hill Construction). It looks at the office, industrial, warehouse and retail sectors and measures the contributions to GDP, salaries and wages generated.
The new study found that in 2016 there were 410 million square feet of new office, retail, warehouse and industrial space built, with the capacity to house more than 1 million new workers with a total estimated payroll of $57.6 billion.
“The importance of commercial development to the U.S. economy is well established, and the industry’s growth is critical to creating new jobs, improving infrastructure, and creating places to work, shop and play,” Thomas Bisacquino, NAIOP president and CEO, said in a statement, said in a statement. “… NAIOP is dedicated to working with the administration, Congress and state legislators to develop bipartisan infrastructure investment and incentives for capital investment that empowers our industry to expand.”
According to the report, written by Virginia economist Stephen Fuller, a professor who holds the Dwight Schar Faculty Chair at George Mason University in Arlington, a key factor in the economy’s growth in 2016 was the continuing expansion of the construction sector. Construction spending has increased each year since 2011, gaining 48.7 percent between 2011 and October 2016. For the year ending in October 2016, total construction spending was up 3.4 percent, exceeding the GDP growth rate for this period.
By sector, office construction expenditures were the highest, totaling $36.6 billion in 2016, an increase of 28.7 percent from 2015. Retail construction expenditures totaled $17.2 billion, a decrease of 7 percent from gains of 8.2 percent in 2015. Warehouse construction totaled $13.6 billion in 2016, registering a sixth consecutive year of increased expenditures and gaining 12.7 percent from 2015.
On the flip side of the coin, industrial construction spending dropped for a second year in 2016 to $15.5 billion, declining 29.9 percent from 2015. The study attributed this pullback to the downturn in the energy sector and a weakening in global demand for U.S. manufactured goods due largely to unfavorable exchange rates with the U.S.’s major trading partners.
The top state for construction value across all four sectors was New York, with direct spending of $24.8 billion in 2016, $46 billion in total economic output and 284,135 jobs supported.
In Virginia, the sector that saw the most development in 2016 was office with $2.1 billion in direct spending, $4.1 billion in total output, and 29,334 jobs. The second most-active sector was retail and entertainment. It drew $1.3 billion in direct spending, $2.6 billion in total output and supported 18,349 jobs.
The full report is online: naiop.org/contributions2017