New study ranks Virginia No. 9 in the country for retail real estate development in 2015
Development and construction of new commercial real estate, including office, industrial, warehouse and retail, continues to be a powerful contributor to the U.S. and state economies, supporting about 3.2 million American jobs and contributing $450 billion to U.S. GDP in 2015, according to a new report released by the NAIOP (Commercial Real Estate Development Association) Research Foundation.
According to the report, 429.4 million square feet of commercial real estate space was built in 2015. Retail and warehouse construction both saw strong gains. Warehouse construction saw a fifth strong year of increased expenditures in 2015, gaining 10.8 percent, while retail expenditures were up 8.2 percent from 2014.
According to the report, Virginia is the No. 9 ranked state in the country last year for retail real estate development with just under $1 billion of new development in 2015 that supported 13,281 jobs. Overall, commercial real estate development in the state supported 34,482 related jobs in 2015 and contributed $2.5 billion to the state’s economy.
“Commercial real estate continues to bring new jobs, improve infrastructure, and create places to live, work and play,” Thomas Bisacquino, NAIOP president and CEO, said in a statement. “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 forecasts accelerating construction spending in 2016, 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.
The report’s author is well known Virginia economist Stephen S. Fuller. He’s the Dwight Schar Faculty Chair university professor, and senior adviser and director for special projects of the Center for Regional Analysis at George Mason University.
In the report, Fuller says, “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. The report attributed the drop to a decline in energy prices that deterred the construction of new energy facilities.
In terms of office construction, expenditures increased by 3 percent in 2015, building on a strong gain of 29.8 percent in 2014.
Yet industrial construction spending decreased sharply, falling 46.2 percent, following a strong gain in 2014, when it increased 74.2 percent. The pullback in industrial/manufacturing construction was attributed to the downturn in the energy sector and a slowdown in global demand for U.S. manufactured goods.
NAIOP, an 18,000-member industry trade association based out of Herndon, has conducted its study since 2008. The mission is to estimate the annual economic contribution of commercial real estate development to the U.S. economy.
The study uses key data sets from the U.S. Census Bureau and Dodge Data & Analytics (formerly McGraw-Hill Construction).