2.8 Million U.S. jobs supported by industry as industrial, warehousing, office and retail sectors see strong gains. Oregon ranks fourth for industrial construction value.
The commercial real estate development industry grew at the strongest pace since the economic recovery began in 2011, according to an annual report on the state of the industry released by the NAIOP Research Foundation. Oregon is part of the top 10 states with the highest construction value ranking 10th overall and 4th for industrial.
The report, entitled “The Economic Impacts of Commercial Real Estate,” determined that the economic impact realized by the development process rose a significant 24.06percent over the previous year, the largest gain since the market began to recover in2011.
Direct expenditures for 2013 totaled $124 billion, up from $100 billion the year before, and resulted in the following economic contributions to the U.S. economy:
• Total contribution to U.S. GDP reached $376.35 billion, up from $303.36 billion in2012;
• Personal earnings (or wages and salaries paid) totaled $120.02 billion, up from$96.75 billion in 2012; and
• Jobs supported (a measure of both new and existing jobs) reached 2.81 million in2013, up from 2.27 million the year before.The report says that the outlook for the remainder of 2014 and into 2015 is that thefigures will continue to rise, with year-over-year growth expected in the range of 8-15percent.
Commercial real estate development has an immense ripple effect in the economy,providing wages and jobs that quickly roll over into increased consumer spending.“Commercial development’s economic impact is tremendous; simply put, a healthydevelopment industry is critical to a prosperous U.S. economy,” said Thomas J.Bisacquino, NAIOP president and CEO. “As the uneven pace of the nation’s economicrecovery continues, the industry seeks public policy certainty that bolsters investors’ anddevelopers’ confidence. Despite this lack of assurance, we see positive indicators of arebounding industry, but believe the industry could be more robust.”
Industrial, Warehousing, Office and Retail Show Strong Gains:
• Industrial development posted a year-over-year gain of 48.5 percent due mainlyto groundbreaking of energy-processing facilities.
• Warehouse construction registered a third strong year of increased expendituresin 2013, gaining 38.1 percent in 2013. This is on top of 2012 growth of 28.4percent and 2011 growth of 17.8 percent, showing a sustained increase indemand for warehousing space.
• Office construction expenditures rose for a second year in 2013, up 23.3 percentfrom 2012.
• Retail construction expenditures rose modestly for a third year in 2013, up 4.8percent from 2012.
Operations and Maintenance Surge Even As Building Owners Cut Costs WithEnergy Efficiencies and New Technologies:
Through increased energy efficiency and advanced technology, building owners cut theaverage per-square-foot cost of operating building space in the U.S. by 14 cents, from$3.20/square foot to $3.06/square foot. Still, maintaining and operating the existing 43.9billion square feet of commercial real estate space resulted in $134.3 billion of directexpenditures, and resulted in the following economic contributions to the U.S economy:
• Total contribution to GDP in 2013 $370.9 billion;
• Personal earnings (wages and salaries) totaled $116.8 billion; and
• Jobs supported, 2.9 million.
Top 10 States by Construction Value for Industrial:
1. Louisiana
2. Iowa
3. West Virginia
4. Oregon
5. Georgia
6. New York
7. Kansas
8. Pennsylvania
9. Alabama
10. Indiana
Top 10 States by Construction Value for Office, Industrial, Warehouse and Retail:
1. Texas
2. Louisiana
3. New York
4. California
5. Iowa
6. Florida
7. Maryland
8. Georgia
9. West Virginia
10. Oregon
Four new states joined the list: Louisiana at No. 2, Maryland at No. 7; West Virginia atNo. 9, and Georgia at No. 10. These states made the top ten list due predominantly todevelopment of highly specialized and expensive energy-related processing facilities.Illinois, Ohio, Massachusetts and North Carolina dropped off the top 10 list, slipping toNos. 11, 14, 15 and 18 respectively.
The report includes detailed data on commercialreal estate development activity in all 50 states, and also ranks the top 10 statesspecifically according to office, industrial, warehouse and retail categories.
The report is authored by Dr. Stephen S. Fuller, director of the Center for RegionalAnalysis at George Mason University, and funded by the NAIOP Research Foundation.An executive summary and the full report is online: www.naiop.org/contributions2014.
NAIOP, the Commercial Real Estate Development Association, is the leadingorganization for developers, owners and related professionals in office, industrial, retail andmixed-use real estate. NAIOP provides unparalleled industry networking and education, andadvocates for effective legislation on behalf of our members. NAIOP advances responsible,sustainable development that creates jobs and benefits the communities in which our memberswork and live. For more information, visit www.naiop.org.
