Commercial Real Estate Recovers, But Not Fully, Report Finds
WASHINGTON -- Development and construction of new commercial real estate -- office, industrial and retail buildings -- continued its climb in 2012, supporting some 2.3 million American jobs and contributing $303.4 billion to the economy, a trade group reports.
While this marks the second year since 2007 that the sector posted gains, the industry is far from reaching its potential.
The lower 48 states generated new projects and billions in spending, says a new report from the National Association of Industrial and Office Properties Foundation.
New York leads the top-10 list with $4.80 billion in spending and supporting 122,600 jobs. Ohio is fifth with $2.04 billion in spending and supporting 76,830 jobs.
Study highlights:
- Commercial real estate alone supported at least 2.3 million American jobs in 2012.
- Commercial real estate contributed $303.4 billion to U.S. gross domestic product, a 16% increase from 2011.
- Construction and development spending grew nearly 10% from 2011.
- 307.5 million square feet were built in 2012, a 29% increase from 2011.
In 2012, the commercial real estate development sector added $303.4 billion to GDP, up from $261.6 billion in 2011, nearly a 16% increase, according to the report. This generated $96.7 billion in new personal earnings and supported 2.3 million full-time equivalent, year-round jobs.
"The commercial real estate industry is improving, yet is being hindered from reaching its full potential," said Thomas J. Bisacquino, president and CEO of the association, in a prepared statement. "Developers and investors have to be able to anticipate levels of demand three to five years ahead, but their vision is clouded because of uncertainty in Washington and in state capitals, which explains the slow pace of recovery. If we don't get clarity on budget policy, tax reform or the renewal of terrorism risk insurance, it will hold us back from our true potential to really drive greater job creation and economic growth in America."
The sector reached its equilibrium in 2012, providing the support for broad-based spending in the development (pre-construction, construction and post-construction) of commercial real estate. Construction spending on commercial real estate totaled $100.1 billion, a 9.9% increase over 2011. The increases in construction spending and activity resulted in the building of 307.5 million square feet of new space, an increase of 29% from 2011.This new space has the capacity to house 775,800 jobs.
The author of the report, economist Stephen S. Fuller, Ph.D., University Professor and director of the Center for Regional Analysis at George Mason University, agreed that growth projections were positive but clouds are on the horizon. "These gains and planned projects face a difficult economic road as current changes in fiscal policy and decreases in federal spending threaten the current projections of increased GDP growth and job creation through 2015," Fuller said in a prepared statement. "These advances and increased projects are paramount to continued growth in the country, as the U.S. economy cannot achieve sustained expansion in the absence of the development industry's full recovery."
Copyright 2013 The Business Journal, Youngstown, Ohio.
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