For the first time since the recession began in 2007, development and construction of commercial real estate is rebounding -- and Texas is at the forefront. It's an important trend for the valuation of new and existing business properties and for the economy in general.
As a new report explains, "The value of commercial buildings is much more than the sum of their construction outlays or their assessed valuation. Commercial real estate development, construction and operations create a ripple effect in the economy."
By the Numbers
The total economic impact of the development of commercial real estate added $261.6 billion to the Gross Domestic Product in 2011, a 13% increase over 2010.
Other encouraging statistics from a research report entitled, "How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011" conclude:
Construction spending on non-residential real estate grew more than 12%
238.3 million square feet of new commercial space was built, 2.5% more than in 2010
New projects provide the capacity for 610,000 jobs with an annual payroll of $26.8 billion
In addition to the advances made last year, the report by the NAIOP Research Foundation expects commercial construction spending to increase again this year and further accelerate in 2013 and 2014.
Activity Centered in Texas
The impact of new commercial construction spending was felt throughout the nation. However, the following states posted the highest amounts of direct spending on office, industrial and retail development in 2011.
1. Texas - $7.9 billion
2. New York - $6.5 billion
3. West Virginia - $5.9 billion
4. California - $4.5 billion
5. Arizona - $4.2 billion
While the economic contributions from the actual construc¬tion phase of new buildings is widely understood, the post-construction impacts are often overlooked. Property taxes generated by building operations represent a continuing flow of expenditures that extend throughout the life of the structures. Since these post-construction benefits are cumulative, they are a lifeline for municipal government operations and a key to economic growth.