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The Impact of Commercial Development

View of downtown San Francisco, CA. Image by Kate Stockert.

Recently a REALTOR® contacted the NAR Library to inquire after studies and reports that demonstrate the positive impact of commercial real estate development and urban planning on communities. Here is what we found:

The Building Owners and Managers Association International (BOMA) Economic Impact Study database offers quite a few useful reports on the value of commercial real estate, including a report for each US state. A sample of BOMA’s work:

The commercial real estate industry is a significant contributor to the nation’s economic engine. In 2011, the office building industry contributed $205 billion to the U.S. economy. Real estate is one of the leading employers in the United States. Office building operations alone supported more than three million jobs in 2011. Firms in the commercial real estate industry employ building managers, asset managers, custodial staff, security staff, brokers and accountants and retain a myriad of other services through contract, such as legal consulting, landscape maintenance and window cleaning to name just a few. In addition, the nearly 10 billion square feet of office space located in the 94 markets served by BOMA’s 93 local associations provide work space for an estimated 44 million office jobs.

The NAIOP Research Foundation has done a similar impact study and released state by state figures comparing data from 2007 and 2010.

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. This contribution consists of annual direct spending for new development and construction and annual expenditures to operate existing buildings. Additional important economic benefits – the ripple effect – are also derived from the re-spending of the salary and wages supported by direct construction and operating outlays and purchases of construction-related materials and services from vendors. The combination of these direct and indirect (and induced) outlays constitutes the total output or contribution to the national economy.

Here are a few articles from the ProQuest database (members only access, required password information) that might also be of use:

Anonymous. (2007). Commercial real estate props up economy. Mortgage Banking, 67.10: 96.

The commercial real estate development sector not only has kept the economy from stalling in the face of the slowing housing market, but it is also been a significant driver of economic growth, according to a study commissioned by the National Association of Industrial and Office Properties, Herndon, VA. The basis of commercial real estate’s ongoing sustainability lies in its three phases of development: 1. soft costs, 2. hard costs, and 3. building operations. The report also identifies the top 10 states by construction value in four categories — office, industrial, warehouse and retail — and by the number of jobs and increase in personal income tied to that construction.

Bell, J. (2012). Rust belt recovery. Mortgage Banking, 72.9: 64-68.

Currently, the rebound in the Midwest is revealing an economic spark in the heartland that may be missing elsewhere around the country. Three Midwestern cities — Cleveland, Detroit and Minneapolis St. Paul are evidence of just that: 1. Cleveland, once an outpost of the Rust Belt, is transforming itself into a bustling business and commercial center […] Real estate sources are anticipating moderate gains in commercial lending in Detroit for 2012 into 2013.

Sohn, D. W. (2012). The economic value of walkable neighborhoods. Urban Design International, 17.2: 115-128.

Williams, D. R., & Marks, J. (2011). Community development efforts offer a major opportunity to advance Americans’ health. Health Affairs, 30.11: 2052-5.

Large differences in the opportunities and resources that Americans have to be healthy have led to sizable variations in health by geography, race and ethnicity, income level, and education. By enhancing the opportunities for good health in the places where we live, learn, work, play, and worship, community development initiatives can be important drivers of improved health. As articles in this month’s issue of Health Affairs attest, community development and public health are two forces that often have the same goals. Because there has been little research to date documenting which aspects of community development could have the greatest impact on health, it will be increasingly necessary to rigorously evaluate the impact of various interventions to guide policy makers in identifying the most important measures to take in an environment of constrained financial resources.

We also have a few books in the NAR Library on the topic of urban renewal (check out up to 3 books at a time for a period of 30 days; shipping $10) :

For instant gratification, we offer a few eBooks on this topic too (download the free Adobe Digital Editions software first, then checkout and download eBooks):

Local governments and non-profit organizations frequently publish economic impact studies (or hire consulting firms to conduct the studies). For example, the Seattle Public Libraries hired a contractor to put together this economic impact study. A few other examples include:

Economic Impact Of Local Businesses vs. Chains: The following studies have found that locally owned stores generate much greater benefits for the local economy than national chains. Indie Impact Study Series: Salt Lake City, Utah — Civic Economics, August 2012” (Source: Institute for Local Self-Reliance).

Utah Valley University. (2010). Economic impacts of Utah Valley University.

Keywords (these are terms used to find the above resources):

  • commercial real estate
  • commercial real estate development
  • economic impact
  • economic impact study
  • impact study
  • commercial district development
  • urban renewal
  • urban policy
  • city planning

Kate

Information & Web Content Specialist at the National Association of REALTORS®

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