The commercial-real-estate-development industry grew at its fastest pace since the economic recovery began in 2011, an annual report recently released by the NAIOP Research Foundation reveals.
The report, titled “The Economic Impacts of Commercial Real Estate,” determines the economic impact realized by the development process rose 24.06 percent over the previous year, the largest gain since the market began to recover in 2011. Direct expenditures for 2013 totaled $124 billion, up from $100 billion the year before.
The report says the figures will continue to rise for the remainder of 2014 and into 2015, with year-over-year growth in the range of 8 to 15 percent expected.
Strong gains were seen in the following sectors:
- Industrial: Development posted a year-over-year gain of 48.5 percent, which is attributed primarily to groundbreaking of energy-processing facilities.
- Warehouse: Warehouse construction registered a third strong year of increased expenditures in 2013, gaining 38.1 percent in 2013. This is on top of 2012 growth of 28.4 percent and 2011 growth of 17.8 percent.
- Office: Office-construction expenditures rose for a second year in 2013, up 23.3 percent from 2012.
- Retail: Retail-construction expenditures rose modestly for a third year in 2013, up 4.8 percent from 2012.
Through increased energy efficiency and advanced technology, building owners cut the average per-square-foot cost of operating building space in the United States by 14 cents, from $3.20 to $3.06. Still, maintaining and operating the existing 43.9 billion sq ft of commercial real-estate space resulted in $134.3 billion in direct expenditures.
The top 10 states by construction value for office, industrial, warehouse, and retail were:
- New York
- West Virginia
Louisiana, Maryland, West Virginia, and Georgia are new to the list. These states made the top 10 primarily because of the development of highly specialized and expensive energy-related processing facilities.
Illinois, Ohio, Massachusetts, and North Carolina dropped off the top 10 list, slipping to nos. 11, 14, 15, and 18, respectively.
The report includes detailed data on commercial-real-estate-development activity in all 50 states.
The report was authored by Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, and funded by the NAIOP Research Foundation.
The full report and an executive summary are available at www.naiop.org/contributions2014.