To an economist, buildings are much more than structures providing shelter. They are structures that create economic capacity for businesses. While the economic contributions accruing from the actual construction phase for new buildings are widely understood and valued, the pre-construction and post-construction impacts of the development process often are overlooked and undervalued.
So opens “Economic Impacts of Commercial Real Estate, 2015 Edition,” an annual report published by the NAIOP Research Foundation.
The news for real estate is good:
- The commercial construction sector continued its recovery in 2014 after first showing signs of a rebound in 2011, following several consecutive years of decreased spending from its peak in 2008.
- The 2014 gains spanned most commercial building types and have generated increased construction employment.
- Forecasts for 2015 project accelerating construction spending, with single-digit gains in fixed investment in commercial structures such as office, retail, health care and distribution facilities.
- These positive trends in construction spending, especially in office, retail, health care and warehouse buildings, are projected to gain further strength in 2016 and 2017.
And the numbers speak for themselves:
- Based on the existing stock of commercial buildings, totaling 44.2 billion square feet in 2014, direct expenditures totaled $138.4 billion and contributed $382.3 billion to GDP.
- These direct expenditures also generated $120.4 billion in personal earnings (wages and salaries) and supported a total of 3.3 million jobs.
Combining the economic contributions of new development with the operation of existing buildings in 2014, direct expenditures of $312.7 billion resulted in the following economic contributions to the U. S. economy:
- Contributed $910.4 billion to U.S. GDP.
- Generated $288.8 billion in personal earnings.
- Supported a total of 7.0 million jobs.
This is the first in a series of informational posts on the Research Foundation’s valuable report, “Economic Impacts of Commercial Real Estate, 2015 Edition.” Download the full report and check back to Market Share for more analysis and excerpts.
Kathryn Hamilton is Vice President for Marketing and Communications at NAIOP Corporate.