Where America Goes to Work

The commercial real estate industry plays a significant role in the U.S. economy. This may seem most obvious during the construction phase, as cranes dot the horizon, workers scramble across scaffolding and trucks deliver a seemingly endless stream of equipment and supplies. But the far larger—and longer lasting—impact actually comes after the ribbon cutting, when the significant annual operating expenses associated with office buildings help support the local economy’s vitality, create new jobs, generate personal income and contribute to the local tax base year after year.

BOMA International’s new economic impact study, Where America Goes to Work: The Contribution of Office Building Operations to the Economy, 2012, details the impact of commercial office space on the national and local economies. The report, an updated version of a study first published in 2009, shows that the short- and long-term expenditures that sustain office building operations—management, maintenance, repairs, building services and utilities—generate significant, continuous and growing expenditures that support local businesses, create job demand and contribute significantly to U.S. gross domestic product (GDP).

The 2012 Study finds that the 9.9 billion square feet of commercial office space located within the 94 markets served by BOMA International’s 93 local associations generated $80 billion in direct operating expenditures in 2011 to the benefit of workers and businesses within their host jurisdictions— enough to build One World Trade Center 20 times over.

The results of the “Where America Goes to Work” study where announced during a press conference on June 25 in Seattle during BOMA International’s annual conference. The author of the report, Stephen S. Fuller, Ph.D., Dwight Schar faculty chair and University Professor; and director, Center for Regional Analysis, George Mason University, delivered the results. Key findings included:

• For each dollar spent on office building operations, the national economy gained $2.57, with the result that $79.7 billion in annual operating expenditures contributed a total of $205.1 billion to the gross domestic product (GDP) in 2011—equivalent to the state of California’s annual budget;
• For each dollar spent on office building operations, workers in the United States realized an increase of $0.76 in personal earnings, generating a total of $61.0 billion in new earnings for workers residing within these 94 office market areas and respective state economies in 2011;
• For each $1 million in expenditures for office building operations, 19.6 jobs were supported nationwide. As a result, $79.7 billion in annual operating expenditures supported a total of 1.6 million indirect jobs across all sectors of the national economy in 2011—about the same number employed by McDonald’s worldwide—in addition to an estimated 2.2 million more jobs directly related to the on-site management and operations of the buildings; and,
• The 9.9 billion square feet of commercial and government-owned office space located in the 94 markets served by BOMA’s 93 local associations provided workspace for an estimated 44.3 million office jobs.

“When you also consider the secondary benefits resulting from how the money generated by building operations is spent and re-spent, the true impact to local, state and national economies is very significant,” said Fuller. “Whether a tenant supports an in-building dry cleaner, hails a taxi, takes a business associate to lunch at a nearby restaurant, or grabs a soda from a sidewalk vendor, it all goes toward supporting significant job growth directly and indirectly, and helps generate new personal earnings that further stimulates the economy.”

2011-2012 BOMA International Chair Boyd Zoccola noted, “The study reveals just how significant a role the commercial real estate industry, and office building operations in particular, has on the U.S. economy. The annual operating expenses associated with office buildings help support local economies by creating new jobs, generating personal income and contributing to the local tax base.”

During the press conference, Fuller gave reporters a big picture perspective of the significance that building operations have on the greater economic engine, explaining that the 9.9 billion square feet of office space represented across 94 markets houses 44.3 million workers. On average each of these office workers contributed $116,200 to GDP; and, all together these office workers contributed a total of $5.15 trillion to U.S. GDP totaling $15 trillion.

The analysis of the study was limited to commercial office space in buildings with a minimum of 10,000 square feet and excluded buildings owned by their occupants (not available for leasing for general purpose office use). The report also drills into the economic impact of office space in each of the markets served by BOMA’s 94 local associations.