New development and ongoing operations of existing commercial real estate buildings in the United States – office, industrial, warehouse and retail – generates significant economic growth at the state and national levels. The combined impact of these property types supported 8.3 million American jobs and contributed $1 trillion to U.S. GDP in 2018.
The study “Economic Impacts of Commercial Real Estate,” published annually by the NAIOP Research Foundation, measures the contributions to GDP, salaries and wages generated, and jobs created and supported from the development and operations of commercial real estate.
- New commercial real estate development and ongoing operations of existing buildings supported 8.3 million American jobs in 2018 (a measure of both new and existing jobs), resulting in salaries and wages of $325.9 billion.
- New commercial real estate development and ongoing operations of existing buildings contributed $1 trillion to U.S. GDP in 2018.
- 532 million square feet of office, retail, warehouse and industrial commenced construction in 2018, with capacity to house more than 1.5 million workers.
“Commercial real estate development’s contributions to the U.S. economy are significant. The industry’s growth is critical to creating new jobs, improving infrastructure, and creating places to work, shop live and play,” said Thomas Bisacquino, NAIOP president and CEO. “Our industry’s performance has been bolstered by strong consumer spending and increases in wages and job growth, as well as tax reductions enacted in December 2017 under the Tax Cuts and Jobs Act. NAIOP is committed to ensuring that the administration and Congress understand our vital role in the economy.”
The report identifies several key factors that are expected to impact economic growth in 2019 and beyond, including:
- Interest rates are projected to move higher in 2019 as the Federal Reserve raises its federal funds rate an additional one half to three-quarters of a point in two or three increments over the year.
- Labor shortages are already appearing in several key sectors, including construction, and will tighten further in 2019 with resulting increases in wage inflation.
- Energy prices, which unexpectedly declined during the second half of 2018, are expected to rebound in 2019 to their highest levels since 2014.
- Resolution of trade wars and higher tariffs instituted in 2018 that could affect U.S. exports, which increased their contribution to GDP expansion in 2018.
Construction Activity Contributes to Ongoing Economic Expansion
Construction spending remained a key contributor to the U.S. economy’s continued expansion in 2018. It has increased each year since 2011, gaining 64.5 percent between October 2011 and October 2018. For the year ending in October 2018, total construction spending was up 4.9 percent, exceeding the GDP growth rate (2.9 percent) for the same period.
Construction data provided by Dodge Data & Analytics for office, industrial, warehouse and retail show:
- Office construction expenditures totaled $41.2 billion in 2018, a strong 13.6 percent increase from 2017, after registering a slight decrease of 1.7 percent in 2017.
- Industrial construction spending, which had decreased sharply in 2015 and 2016, increased for a second consecutive year in 2018, gaining 34.2 percent after increasing 52.5 percent in 2017. Gains reflect a turnaround in the energy sector, the strengthening of the global economy and increased export sales, and continued growth of domestic consumer sales of durable goods, especially automobiles and trucks.
- Warehouse construction outlays declined in 2018 by 0.7 percent after having increased in each of the previous seven years.
- Retail construction expenditures totaled $15.5 billion in 2018, a decrease of 9.5 percent from 2017 level, after declining 0.8 percent in 2017 and 7.0 percent in 2016.
Economic Contributions for Building and Nonbuilding Construction
Building and nonbuilding (infrastructure) construction contributes $3.7 trillion in construction spending to the U.S. economy and accounted for 18.1 percent of all economic activity in 2018, generating $1.2 trillion in new personal earnings and supporting a total of 25 million jobs throughout the U.S. economy.
Top 10 States by Development Impacts in 2018
The following are the top 10 states by development impacts (ranked by contribution to GDP and jobs created and supported) for office, industrial, warehouse and retail, combined:
|State||Direct Construction |
(in billions of dollars)
|Total Output / |
Contribution to GDP
(in billions of dollars)
Jobs Created |
|3. New York||$19.825||$36.196||207,915|
The full report includes detailed data on commercial real estate development activity in all 50 states and the District of Columbia, including direct spending; total output; salaries and wages; and jobs supported.
The full report is online: naiop.org/contributions2019
The “Economic Impacts of Commercial Real Estate” report is authored annually by economist Stephen S. Fuller, Ph.D., Dwight Schar Faculty Chair, university professor and director, Stephen S. Fuller Institute, Schar School of Policy and Government at George Mason University, Arlington, Virginia. Data was provided by Dodge Data & Analytics.
Since 2008, NAIOP has conducted this study for purposes of estimating the annual economic contribution of commercial real estate development to the U.S. economy. This study is used by real estate professionals and municipal, state and federal officials and employees, to understand and quantify the key economic benefits of commercial real estate development.
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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 19,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit naiop.org.