The Commercial Real Estate Development Association, NAIOP, released a positively sunny report from the construction sector that showed a greater than 12% bump in spending on construction from 2010 to 2011.
Construction is a leading indicator for a whole raft of economic outcomes:
The total economic impact of the development (pre-construction, construction and post-construction) of commercial real estate during 2011 added $261.6 billion to the GDP, compared to $231.7 billion in 2010, a 13 percent increase, according to the report.
“2011 was a transition year for the U.S. economy and the construction sector,” said the report’s author, economist Stephen S. Fuller, PhD, Dwight Schar Faculty Chair, University Professor and the Director of the Center for Regional Analysis at the George Mason University. “The U.S. economy shifted from a federal stimulus to private-sector driven growth pattern and construction spending grew accordingly.”
While the role of stimulus remains a contentious one given the catastrophic trajectory the market was on prior to the application of stimulus, there is less controversy around the link between construction spending and follow-on effects elsewhere in the economy.
2011 was the first year to post gains in development and construction of commercial real estate since the recession began in 2007, according to NAIOP’s report, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011, released May 1. The total economic impact of the development (pre-construction, construction and post-construction) of commercial real estate during 2011 added $261.6 billion to the GDP, compared to $231.7 billion in 2010, a 13 percent increase, according to the report.
Construction spending on commercial real estate totaled $92.3 billion, a more than 12 percent increase over 2010. This spending supported nearly 2 million jobs nationally.
The increases in construction spending and activity resulted in the building of 238.3 million square feet of new space, an increase of 2.5 percent from 2010. This new space has the capacity to house 610,000 jobs with an annual payroll of $26.8 billion.
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