WASHINGTON, D.C. – 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 today 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