NAIOP: Commercial Real Estate Impact on U.S. Economy Grows
The impact of new commercial real estate development and of the ongoing operations of existing commercial real estate buildings in the United States continues to grow, according to the annual Economic Impacts of Commercial Real Estate, 2022 U.S. Edition, research study conducted by the NAIOP Research Foundation.
The combined economic contributions of new commercial building development and the operations of existing commercial buildings in 2021 resulted in direct expenditures of $434 billion and the following impacts on the U.S. economy:
- Contributed $1.2 trillion to U.S. gross domestic product (GDP)
- Generated $418.7 billion in personal earnings
- Supported a total of 8.5 million jobs.
Based on the existing stock of commercial buildings — totaling 51 billion square feet at the end of the third quarter of 2021 — direct expenditures for building operations totaled an estimated $194.5 billion and contributed $531.5 billion to GDP. These direct expenditures also generated $187.2 billion in personal earnings (wages and salaries) and supported 4.2 million jobs.
According to the report, in March and April 2020, the construction industry lost 1.1 million jobs, or 14.6% of employment; by November 2021, it added back 1 million jobs, leaving a deficit of 115,000 (1.5%) from the pre-recession peak. Aside from the impact on labor, the construction industry at large was spared the impact from the pandemic recession. The continued demand for new construction throughout the pandemic has positively impacted the economy. The demand for construction inputs—from design services to construction goods and labor—meant that the industry was a catalyst for the economic recovery. The construction industry continues to lead the overall U.S. economic recovery from the pandemic recession.”
Among other survey highlights:
- Total construction expenditures (hard costs) for new office, industrial, warehouse and retail buildings in 2021 totaled $125.6 billion, up $20 billion, or 18.9%, from the revised annual total for 2020.
- Office construction expenditures averaged $46 billion over the past five years (2016-2020). Office activity totaled $40.9 billion in 2021, down 5.9% from 2020 and down 24.9% from 2019.
- Industrial (manufacturing) construction expenditures averaged $25.6 billion over the past five years (2016-2020). Industrial activity totaled $28.2 billion in 2021, up 81.3% from 2020 ($15.5 billion) but down 16.3% from 2019.
- Warehouse construction outlays averaged $26 billion over the past five years (2016-2020). Warehouse activity surged 25.9% in 2021 to total $43.2 billion. Activity was up 43% from 2019.
- Retail construction expenditures averaged $17 billion over the past five years (2016-2020). After decreasing 26% in 2020, retail posted a rebound in 2021, increasing 8.3% to $13.3 billion. Retail activity remained down 19.5% from 2019.
“We’re obviously going through a paradigm shift in all industries as a result of the pandemic,” said Thomas J. Bisacquino, president and CEO of NAIOP. “The commercial real estate industry has continued to expand because of that change, adding more to GDP, employing more people and generating more in personal earnings. While we’ve seen a shift that includes less office building development and more industrial/warehouse development, we expect a return to more normal patterns of development as we continue to emerge from the immediate impact of the pandemic on the industry.”
Top 10 States by Development Impacts in 2021
The following are the top 10 states by development impacts (ranked by total output)
| State | Total Output (in Billions of Dollars) | Jobs Supported | Personal Earnings (in Billions of Dollars) |
| Texas | $75.89 | 526,181 | $28.63 |
| Arizona | $45.24 | 358,148 | $18.16 |
| California | $44.74 | 294,590 | $17.82 |
| New York | $39.0 | 238,521 | $14.68 |
| Florida | $30.63 | 259,009 | $12.34 |
| North Carolina | $18.22 | 142,083 | $6.98 |
| Georgia | $17.15 | 133,886 | $6.57 |
| Pennsylvania | $16.0 | 102,165 | $5.88 |
| Ohio | $14.8 | 103,811 | $5.5 |
| Massachusetts | $13.99 | 87,174 | $6.21 |
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 Economic Impacts of Commercial Real Estate, 2022 U.S. Edition report is authored by Brian Lewandowski, Jacob Dubbert, Michael P. Kercheval, Ph.D., and Richard Wobbekind, Ph.D., at the Business Research Division, Leeds School of Business, University of Colorado Boulder, with data provided by Dodge Data and 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.
