The Impact of U.S. Commercial Real Estate Development and Operations Grows; Supports 9.2 Million Job

The Impact of U.S. Commercial Real Estate Development and Operations Grows; Supports 9.2 Million Jobs, Contributes $1.14 Trillion to the Economy

Individual state data included in report

February 10, 2020

The impact of new development and of the ongoing operations of existing commercial real estate buildings in the United States – office, industrial, warehouse and retail – has grown to support 9.2 million American jobs and contribute $1.14 trillion to the U.S. GDP in 2019, an increase from 8.3 million jobs and a contribution of $1.0 trillion to GDP in 2018.

Based on the existing stock of commercial buildings — totaling 49.6 billion square feet at the end of the third quarter of 2019 — direct spending on building operations totaled an estimated $173.0 billion and contributed $464.0 billion to GDP.

In addition, 563.3 million square feet of new office, industrial, warehouse and retail space newly constructed in 2019 has the capacity to house 1.4 million new workers with a total estimated annual payroll of $83.5 billion.

The findings were presented in the annual study, “Economic Impacts of Commercial Real Estate, 2020 U.S. Edition,” released this week by the NAIOP Research Foundation. The study measures the contributions to GDP, salaries and wages generated, and jobs created and supported from the development and operations of commercial real estate.

The study broke out several key measures by commercial real estate industry sector:

  • Office construction expenditures totaled $50.8 billion in 2019, up 5.4% from 2018, building on its 12.3% gain the previous year.
  • Retail construction expenditures totaled $14.4 billion in 2019, a decrease of 15.1% from 2018. That marks four straight years of decline; expenditures fell 9.5% in 2018, 0.8% in 2017 and 7.0%in 2016. The last time retail construction spending increased was in 2015.
  • Warehouse construction outlays rose in 2019, gaining 12.6% from 2018. Construction spending had declined slightly in 2018 (0.7%) after increasing in each of the preceding seven years.
  • Industrial construction spending, which fell sharply in 2015 and 2016 before increasing in 2017 and 2018, declined 31.7% in 2019. This reflects the manufacturing sector’s weaker performance during the year, caused in part by tariffs that have disrupted foreign trade.

Combined, commercial, residential, institutional and infrastructure development and operations contributes $3.9 trillion in construction spending and accounted for 18.1% of all U.S. economic activity in 2019.