NY, TX dominate 2016 commercial development
- The U.S. commercial real estate market — including office, retail, warehouse and industrial space — added $861 billion to the nation's gross domestic product in 2016 and supported 6.25 million jobs, according to a report from the Commercial Real Estate Development Association (also known as NAIOP).
- New York's total CRE output was $46 billion with direct spending of $25 billion — the most of any state — which supported more than 284,000 jobs. Texas was the runner up at $44 billion in total output, $18.5 billion in direct spending and almost 311,000 jobs.
- The U.S. commercial real estate sector saw the completion of 410 million square feet of commercial space last year, enough to accommodate 1 million new workers with an estimated payroll of nearly $58 billion.
Texas is likely to see development continue to grow, as it is home to two of the fastest-growing cities in the U.S., according to a recent report from the American City Business Journals. Houston and Dallas–Fort Worth lead a group of 11 major U.S. metros that are each adding more than 1,000 people per week.
In a breakdown of the national construction expenditure figures, NAIOP said the retail sector fell 7% between 2015 and 2016 to $17 billion, but office construction increased 28.7% to almost $37 billion, and warehouse construction rose 12.7% to $13.6 billion. Industrial saw a large contraction last year — primarily due to a weak energy sector — with construction spending in that sector falling almost 30% to $15.5 billion.
ConstructConnect reported last month that office construction surged 106.4% in February 2017, demonstrating continuing strong demand for new office space, particularly in major markets. For example, in New York City, construction recently kicked off on the $3 billion One Vanderbilt project, a mixed-use office high-rise. That project, as well as several other megaprojects in the state, are big contributors to New York's dominance in new commercial development.
Mixed-use commercial real estate developments, whether anchored by entertainment or office components, continue to pop up, contributing to the overall strength of the commercial real estate market.
In October, construction began on the $1.5 billion Frisco Station, the largest development in what has become known as the "$5 billion mile" in Frisco, TX. When complete, Frisco Station will have 5.5 million square feet of office space, 2,400 apartments, a 40-acre medical complex, 650 hotel rooms and 300,000 square feet of retail, dining and entertainment venues.
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