May 21, 2007—An analysis by the National Association of Industrial and Office Properties (NAIOP) Research Foundation shows that the thriving commercial development sector has buffered the slowdown in the residential sector.
Using 2005 data, the latest comprehensive data available, a study by Dr. Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, determined that in 2005 commercial real estate spending added $498.4 billion to the Gross Domestic Product (GDP), which was $11.9 trillion that year. By comparison, the federal government contributed $498.8 billion to the 2005 GDP.
The commercial real estate development industry is also one of the leading US employers, notes the study, supporting 4.2 million full-time equivalent jobs in 2005, and generating personal earnings of $155.8 billion. Each $1 million spent in new construction supports 28.5 full-time jobs.
The data and analysis are detailed in “The Contribution of Office, Industrial and Retail Development and Construction on the U.S. Economy,” a report authored by Dr. Fuller, and funded by the NAIOP Research Foundation. The report was produced using data provided by the Bureau of Analysis, US Department of Commerce, US Census Bureau, McGraw Hill Construction, and a NAIOP member survey.
The report also identifies the Top 10 states by construction value in four categories (office, industrial, warehouse and retail), and by the number of jobs and increase in personal income tied to that construction. Texas leads in industrial construction, while California leads in the other three categories. Overall, for total commercial construction, California ranks first, Texas second and Florida third, followed by Georgia, Illinois, Indiana, New York, Ohio, Virginia and Arizona.
This report represents the first time the commercial real estate industry has been able to quantify the numbers that demonstrate the industry’s considerable and sustained contribution to the US economy, says NAIOP. With this data, NAIOP hopes to educate the public and state and local governments on the ways that commercial development makes a positive and lasting contribution to their communities.
NAIOP is a leading trade association for developers, owners, investors and other professionals in industrial, office and mixed-use commercial real estate. For more information, see the Web site.
