When it comes to the economy and what role commercial real estate development plays, the numbers are impressive:
- Commercial real estate development supported 3.2 million American jobs in 2015 (a measure of both new and existing jobs).
- Commercial real estate development contributed $450 billion to U.S. GDP in 2015.
- There were 429.4 million square feet of commercial real estate space built in 2015, with capacity to house 1.1 million new workers with an annual payroll of $53.0 billion.
These data points from “Economic Impacts of Commercial Real Estate, 2016 Edition,” an annual report published by the NAIOP Research Foundation, are strong indications of an economy continuing its rise after The Great Recession (December 2007-June 2009).
“Although the economy will have been in recovery for a full seven years by June 2016, the consequences of the recession remain evident,” said author Dr. Stephen S. Fuller, Center for Regional Analysis, George Mason University, in the report. “Many sectors have not recovered the jobs lost during the downturn, and their growth has been uneven.”
A key factor in the economy’s continuing growth in 2015 was the continuing expansion of the construction sector, which was one of the hardest hit during the recession. Construction spending has now increased for five straight years, gaining 39.3 percent between 2011 and 2015. Total construction spending registered its strongest one-year gain in 2015, increasing 19.9 percent from 2014.
The bottom line:
According to the U.S. Census, the total value of building and nonbuilding (which includes infrastructure items like communications, power, highways, sewer and water), expenditures in 2015 was $1.1 trillion. This accounted directly for 6.1 percent of the nation’s GDP of $17.9 trillion and supported a total of 22.5 million jobs throughout the U.S. economy.
Each $1 of this construction spending generated an additional $2.91 of value to the economy, reflecting the cumulative effects of the initial construction expenditures as they are re-spent throughout the economy. Applying this multiplier to the total value of direct construction spending in 2015 increases the value of its overall contribution to GDP to $3.2 trillion, accounting for 17.8 percent of the nation’s economic activity.
This post is part of a series of informational posts on the Research Foundation’s valuable report, “Economic Impacts of Commercial Real Estate, 2016 Edition.” Download the full report and check back for more analysis and excerpts.
Kathryn Hamilton is Vice President for Marketing and Communications at NAIOP Corporate.