New commercial real estate development is a significant driver of U.S. economic activity. It creates jobs, generates personal earnings, and produces significant contributions to national and state economies, according to the Economic Impacts of Commercial Real Estate research study conducted annually by the NAIOP Research Foundation.

The report states the combined economic contributions of new commercial building development and the operations of existing commercial buildings in 2024 resulted in direct expenditures of $898.5 billion and the following impacts on the U.S. economy:

• Contributed $2.5 trillion to U.S. GDP.
• Generated $862.5 billion in personal earnings.
• Supported a total of 14.2 million jobs.

The report was produced in conjunction with the Leeds School of Business, Dodge Construction Network and NCREIF.

Among additional highlights:

• Each $1 of construction spending generated a total value of $2.95 to the economy, reflecting the cumulative effects of the initial construction expenditures as they cycle throughout the economy.
• Data center development is a significant source of growth for the industry. According to the U.S. Census Bureau, private data center project completions have grown rapidly since the beginning of 2023, and are now equal to more than half the construction value of non-data center office projects
• Industrial (manufacturing) and warehousing starts are down, but still significantly above pre-pandemic levels. Much of the new construction now coming online can be attributed to recent reshoring efforts in the U.S. and incentives from The CHIPS Act and Inflation Reduction Act.
• Demand for retail space in 2024 remained strong and shifted toward smaller and more creative spaces. Retailers that thrived offered experiential shopping with a more personalized touch or other activities for consumers to engage in between shopping, such as dining. While larger department stores struggled, retail as a whole proved resilient.
• Non-data center office construction has slowed, but there are early indications that demand for office space has begun to recover in some major markets. New York, for example, reached 82% utilization as of October 2024, and 91% for top-tier office buildings, indicative of a shift in demand to high-quality office properties.

Economy Stabilizing; Job Market Cooling

In 2024, demand for residential and nonresidential construction was strong as worker shortages, supply chain disruptions, and inflation began to normalize. Infrastructure demand continued, while certain categories of nonresidential construction grew, including data centers and retail. The economy as a whole continued to stabilize in 2024. According to Consensus Forecasts, as of November 2024, real (inflation-adjusted) GDP is projected to grow an estimated 2.7% in 2024, slightly down from 2.9% in 2023. Topline inflation as measured by the Bureau of Labor Statistics’ Consumer Price Index was 2.6% in October 2024, down from 3.2% in October 2023. These trends reflect the Federal Reserve’s efforts to execute a soft landing of the post-pandemic economy.

According to the report, recent data suggest the job market is cooling. Total job openings in September 2024 stood at 7.4 million, compared with 9.3 million in September 2023. Job openings in the construction industry decreased from 422,000 in September 2023 to 288,000 in September 2024. Technology, demographics and financing availability are having profound cyclical and secular impacts on commercial real estate property types that will shape the future demand, use and design of commercial space.

“The commercial real estate development industry remains an engine for growth across the United States,” said Marc Selvitelli, CAE, president and CEO, NAIOP. “A surge in manufacturing projects that were initiated over the last two years are now coming online, and new data center construction is providing the infrastructure for exponential advancements in technology and the use of AI in everyday life.”

The full report is online at: naiop.org/contributions25

The “Economic Impacts of Commercial Real Estate, 2025 U.S. Edition” was authored by Brian Lewandowski, Adam Illig, Ethan Street and Richard Wobbekind, Ph.D., Business Research Division, Leeds School of Business University of Colorado Boulder.

Since 2008, NAIOP has conducted this study for purposes of estimating the annual economic contribution of commercial real estate development to the U.S. economy. This study is used by real estate professionals and municipal, state, and federal officials and employees, to understand and quantify the key economic benefits of commercial real estate development.