March 9, 2018
Development and construction of new commercial real estate in the United States, encompassing office, industrial, warehouse and retail properties, generates significant economic growth at the state and national levels. A new report by the NAIOP Research Foundation, “The Economic Impacts of Commercial Real Estate,” reveals the commercial real estate industry contributed $935.1 billion to U.S. GDP in 2017.
NAIOP’s Thomas Bisacquino says, “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. Commercial real estate is a robust contributor to national and state economies, and NAIOP is dedicated to working with the administration, Congress and state legislators to develop bipartisan infrastructure investment incentives that empower our industry to expand.”
The national economy also receives additional boosts from CRE development and operation of existing buildings. The sector generated such economic benefits as supporting 7.57 million American jobs in 2017, which encompasses both new and existing jobs, and generating $286.4 billion in salaries and wages.
The strong construction sector fueled a big part of that economic growth. The CRE sector commenced construction of 523.6 million square feet of new space in 2017, which would be enough space for more than 1.3 million workers. Total hard construction expenditures for the four product types included in the report totaled $98.6 billion, which was an increase of $15.6 billion, or 18.9%, from 2016.
The industrial sector was a strong performer last year. Warehouse construction registered its seventh consecutive year of increased expenditures in 2017, up 55.7% from 2016. Industrial construction spending rebounded in 2017, gaining 52.5% following sharp decreases in the two years prior, which reflects a modest turnaround in the energy sector.
Office and retail construction expenditures registered slight decreases of 0.4% and 0.8% respectively from 2016.