WASHINGTON (May 1, 2012) -- Development and construction of commercial real estate – office, industrial and retail buildings – rebounded in 2011, the first year to post gains since the recession began in 2007, according to a report, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011, released by the NAIOP Research Foundation.
The total economic impact of the development (pre-construction, construction and post-construction) of commercial real estate during 2011 added $261.6 billion to the GDP, compared to $231.7 billion in 2010, a 13 percent increase, according to the report.
Construction spending on commercial real estate totaled $92.3 billion, a more than 12 percent increase over 2010. This spending supported nearly 2 million jobs nationally.
The increases in construction spending and activity resulted in the building of 238.3 million square feet of new space, an increase of 2.5 percent from 2010. This new space has the capacity to house 610,000 jobs with an annual payroll of $26.8 billion.
"2011 was a transition year for the U.S. economy and the construction sector," said the report's author, economist Stephen S. Fuller, PhD, Dwight Schar Faculty Chair, University Professor and the Director of the Center for Regional Analysis at the George Mason University. "The U.S. economy shifted from a federal stimulus to private-sector driven growth pattern and construction spending grew accordingly."
In addition to the advances made in 2011, forecasts for 2012 call for project construction spending to increase and to accelerate further in 2013 and 2014, according to the report.
"For the first time we are seeing across the board increases in this sector," said Thomas J. Bisacquino, NAIOP president and CEO. "We believe this is the most solid evidence yet of a strengthening recovery."
Impacts Felt Regionally
The impact of the new spending was felt throughout the nation. The following states posted the highest amounts of direct spending in all three phases of development across all categories of commercial real estate (number in parenthesis refers to that state's rank in 2010):
Texas (Previous rank: 2), $7.9 billion in spending, 150,102 jobs supported
New York (1), $6.5 billion in spending, 83,762 jobs supported
West Virginia (48), $5.9 billion in spending, 100,889 jobs supported
California (3), $4.5 billion in spending, 70,817 jobs supported
Arizona (14), $4.2 billion in spending, 74,117 jobs supported
Utah (26), $3.6 billion in spending, 77,550 jobs supported
Florida (4), $3.4 billion in spending, 64,970 jobs supported
Illinois (10), $3.0 billion in spending, 50,136 jobs supported
Massachusetts (21), $3.05 billion in spending, 41,382 jobs supported
(tie) North Carolina (7), $3.05 billion in spending, 55,920 jobs supported
This report enables the commercial real estate industry to quantify the numbers that demonstrate its considerable and sustained contribution to the U.S. economy. With this data, public, state and local governments can learn the ways that commercial development makes a positive and lasting contribution to their communities, including:
Supporting the creation of jobs;
Generating personal earnings, and;
Promoting new spending activity across the breadth of the economy.
The report was produced using data provided by the Bureau of Economic Analysis, U.S. Department of Commerce, U.S. Census Bureau, McGraw Hill Construction and a NAIOP member survey. The NAIOP Research Foundation published four previous editions of this report in 2006, 2008, 2009 and 2010.
The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation's core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial, retail and mixed-use properties, impact and benefit communities throughout North America.
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 15,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy.
