The latest report by NAIOP Research Foundation (naiop.org/contributions2016) shows that commercial real estate development was strong in 2015 and supported 3.2 million jobs, and contributed $450 billion to the U.S. economy. South Carolina experienced strong economic growth and ranked in the top ten for construction of new office space. Direct spending for the state was at about $13 billion in office building construction which generated 23,000 jobs in South Carolina.
Office, Industrial, Warehouse and Retail Construction Strong
The new report says that office, industrial, warehouse and retail construction was a powerful contributor to the U.S. and individual state economies, with 429.4 million square feet of real estate space built in 2015, with the ability to support 1.1 million new workers. The report predicts that 2016 will also be a strong year for commercial real estate development and will accelerate construction spending for office, retail, health care and distribution facilities.
The report’s author, economist Stephen Fuller, Ph.D. at George Mason University stated in the report:
“With the direct and indirect impact of construction spending on the U.S. economy (GDP) in 2015 totaling $3.2 trillion and accounting for 17.8 percent of GDP, the continuing growth of construction spending that began in 2011 will provide continuing support to the economy’s growth rate during the next several years. That is, the growth rate for construction spending will exceed the GDP growth rate annually for at least the next five years.”
The report summarized construction spending for office, retail, warehouse and industrial facilities. The spending or hard costs included:
- A strong 29.8 percent increase in office construction in 2014 and an additional 3 percent increase in 2015;
- A strong gain in retail construction expenditures in 2015, up 8.2 percent from the previous year;
- A fifth strong year for warehouse construction, with a 10.8 percent increase in 2015; and
- A sharp decrease in industrial construction in 2015 by 46.2 percent, following a strong gain of 74.2 percent in 2014. The authors of the report contribute this decline in industrial construction to a downturn in the energy sector, which resulted in lower demand globally for U.S. manufactured goods.
Source: ”Economic Impacts of Commercial Real Estate,” 2016 Edition, by Dr. Stephen S. Fuller, July 2016
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