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Research - FEBRUARY 28, 2018

Commercial real estate contributes $935b to U.S. GDP in 2017

by Andrea Zander

Nationally, new development and ongoing operations of commercial real estate — office, industrial, warehouse and retail — supported 7.6 million American jobs (new and existing) and contributed $935.1 billion to U.S. GDP in 2017, according to NAIOP Research Foundation’s, a commercial real estate development association, annual Economic Impacts of Commercial Real Estate.

“The importance of commercial development to the U.S. economy is well established, and the industry’s growth is critical to creating new jobs, improving infrastructure, and creating places to work, shop and play,” said Thomas Bisacquino, NAIOP president and CEO. “Commercial real estate is a robust contributor to national and state economies, and NAIOP is dedicated to working with the administration, Congress and state legislators to develop bipartisan infrastructure investment incentives that empower our industry to expand.”

An important factor in the economy’s growth in 2017 was the strength of the construction sector. Total hard construction expenditures for the four building types included in the report totaled $98.6 billion — a $15.6 billion (18.9 percent) increase from 2016.

Warehouse construction registered its seventh consecutive year of increased expenditures in 2017, up 55.7 percent from 2016. Texas ranked first in warehouse construction, followed by California.

Industrial construction spending rebounded in 2017, gaining 52.5 percent following sharp decreases in the two years prior, reflecting a modest turnaround in the energy sector.

Office construction expenditures totaled $36.5 billion in 2017, a slight decrease of 0.4 percent from 2016. California ranked first in this category.

Retail construction expenditures totaled $17.1 billion in 2017, a decrease of 0.8 percent from 2016. Texas ranked number one, followed by Florida and California.

Combining residential and nonresidential buildings (warehouse/industrial, office, retail, healthcare, entertainment, education, public safety, religious and lodging), as well as infrastructure for water, sewer, highways and power, the total impact of construction spending (direct, indirect and induced) accounted for 18.0 percent of the nation’s economic activity in 2017. For the year, GDP increased by $763.6 billion from its 2016 value (in current dollars). In comparison to this overall gain in GDP during 2017, the total value of construction spending ($1.22 trillion) was 1.6 times greater than the year’s annual GDP growth in dollar value, underscoring that growth in the construction sector outpaced growth in the overall economy.

 

Top 10 States by Development Impacts in 2017

Access rankings for all 50 states.

 

2017
Ranking
State Direct
Construction Spending

(in billions of dollars)
Total Output / Contribution
to GDP

(in billions of dollars)
Jobs Created
and Supported
2016 Ranking
  1 Texas  $24.38  $58.90  379,781  2
  2 California  $24.76  $52.69  333,817  2
  3 Pennsylvania  $16.17  $36.38  227,188  9
  4 New York  $15.74  $28.71  165,063  1
  5 Florida  $9.26  $19.32  155,926  5
  6 Georgia  $6.47  $14.85  114,520  6
  7 Illinois  $5.70  $13.17  80,293  8
  8 Louisiana  $6.43  $12.68  92,153  4
  9 North Carolina  $5.49  $11.98  90,396  Not ranked
  10 New Jersey  $5.14  $10.71  62,381  Not ranked

 

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