Economy Watch: NAIOP Report Details CRE Contributions to Economy
- Jul 20, 2016
Development and construction of new commercial real estate–office, manufacturing, warehouse and retail–continues to be a powerful contributor to the U.S. and individual state economies, according to a new report by the NAIOP Research Foundation, which examines the question of the economic impact of CRE every year. Currently the commercial real estate industry supports about 3.2 million jobs and contributed $450 billion to U.S. GDP in 2015, the report noted.
The report also said that real estate’s contribution to the 2015 U.S. GDP was down slightly from the 2014 contribution, which it attributed to a decline in energy prices that deterred the construction of new energy facilities, and updated multipliers (revised by the Bureau of Economic Anaylsis) that reflect greater technological efficiencies resulting in fewer workers. In any case, there were 429.4 million square feet of commercial real estate space built in 2015, with capacity to house 1.1 million new workers.
Office construction expenditures increased by 3 percent in 2015, building on its strong gain of 29.8 percent in 2014, while retail construction expenditures also experienced a strong gain in 2015, up 8.2 percent from 2014, when it registered a 1.1 percent gain. Warehouse construction registered a fifth strong year of increased expenditures in 2015, gaining 10.8 percent, but there was a pullback in industrial/manufacturing construction of 46.2 percent in 2015, attributable to the downturn in the energy sector and a slowdown in global demand for U.S. manufactured goods.
As befitting their large economies, New York, Texas and California were first, second and third, respectively, among the states in terms of office construction spending. New York vastly outclassed the other two, seeing nearly $17 billion in spending in 2015, with Texas at $6.3 billion and California at $3.1 billion. New York was also first in retail construction spending for the year ($4.8 billion), but Texas took the top spot in spending on new warehouses ($2.7 billion).