Impacts of Development Activity Increase
By: Margarita Foster, editor-in-chief of Development, as well as NAIOP’s vice president of knowledge and research
Annual study finds significant increase in GDP, salaries and wages, and jobs supported.
SINCE 2007, the NAIOP Research Foundation has funded a study that calculates the economic impacts of development activity in the United States. It measures, among other things, three key economic impacts (contribution to GDP, salaries and wages earned, and jobs supported) from preconstruction, site development, construction and tenant improvement activities.
The purpose of the study is to quantify the positive economic benefits brought about by development activity so NAIOP members can share those with public officials as they debate policies at the federal, state and local levels that stand to boost or dampen development activity.
In 2014, the economic impacts from commercial real estate development reached their highest levels since 2007. The report, released in June 2015, was written by Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University. Entitled “Economic Impacts of Commercial Real Estate, 2015 Edition,” the study determined that impacts from development activities increased by 40 percent throughout 2014, posting the largest year-over-year gain since the market began to recover in 2011.
Direct expenditures for office, industrial, warehouse and retail development in 2014 totaled $174.31 billion, up from $124 billion the year before. Those expenditures resulted in the following economic contributions to the U.S. economy:
- Total contribution to U.S. GDP reached $528.09 billion, up from $376.35 billion in 2013;
- Personal earnings (wages and salaries paid) totaled $168.42 billion, up from $120.02 billion in 2013; and
- Jobs supported (a measure of both new and existing jobs) reached 3.94 million in 2014, up from 2.81 million the year before.
The table below summarizes the direct development expenditures by year (vertically) and by development phase (horizontally).
Economic impacts are calculated by applying output, earnings and employment multipliers from the U.S. Bureau of Economic Analysis to direct expenditure figures. All multipliers used in the study at the federal and state levels are listed in Appendix G of the report.
For a copy of the full report, go to: www.naiop.org/contributions2015.