The Economic Power of Commercial Real Estate
The benefits from operating expenditures extend over the lifespan of the assets
BY JOHN SALUS TRI
The best place to hide something is in plain sight. One U.S. industry that proves the saying is commercial real estate. We are surrounded by clues to the true economic power
generated by the massive inventory of U.S. office buildings. Hundreds of millions of people populate offices every day of the week.
Yet the built environment goes mostly unnoticed – until an elevator breaks down or a pipe leaks. This lack of awareness, caused by
the routine nature of going to work each day, can make it easy for
office workers to lose sight of those who make their work possible –
the property professionals who support tenants and keep the elevators and pipes functioning.
The Building Owners
and Managers Association (BOMA) International
recently released its biennial economic impact study,
which reveals the power of
the commercial real estate
industry in the U.S. economy.
According to Where America
Goes to Work: The Contributions of Office Building
Operations to the Economy,
2016, authored by Stephen
S. Fuller, Ph.D., there are 1.75
million operational jobs sup-
ported by the commercial
buildings located in the markets represented by BOMA’s 91 U.S.
local associations. Working mostly behind the scenes, these jobs
span the entire life cycle of the 10. 5 billion square feet of office
space in BOMA’s U.S. markets, from pre-construction to daily opera-
tions and maintenance. Last year this economic engine generated
ongoing operating costs of $89.1 billion.
In turn, that sum accrues additional benefits as it cycles through
the local, state and national economies. The ripple effect extends
from the office building out to the corner delicatessen, the local
building supplies distributor and beyond, supporting significant
direct and indirect job growth. As BOMA’s study highlights, for
each dollar spent in building operations and maintenance expenditures, the U.S. economy gained $2.64. Ultimately, operational
expenditures last year contributed approximately $235 billion to the
national gross domestic product (GDP).
The $89.1 billion spent on operating office buildings also
generated a total of $67.4 billion in new personal earnings as
a result of both the jobs supported directly by this spending
and those supported indirectly by re-spending these dollars
for consumer goods and services. At the national level – where
these annual building operating expenditures have their greatest
cumulative impact – for each dollar spent on direct operating
outlays, 76 cents of new personal earnings were generated.
And that doesn’t begin to scratch the surface. We can’t ignore
the most critical mission of building operations – to support tenants, representing everything from the two-person tech startup
to the international corporation. The 10. 5 billion square feet of
office space located within BOMA’s U.S. markets provides the
“factory floor” for today’s economy; these productive workplaces are where much of the nation’s gross regional product
(GRP) is generated each day.
In fact, assuming an occupancy rate of 85% and an average
of 190 square feet per office worker, buildings in these markets
provided workspace last year for an estimated 46. 9 million
office jobs. Roughly one-third of all U.S. workers work in BOMA
office space. Additionally, each office worker produces an average of $109,332 in annual GDP value for a total GRP contribution
of $5.13 trillion, which, in turn, accounted for 28.9% of the U.S.
economy last year.
The economic benefits from construction end when a building is ready for occupancy. However, the benefits from annual
building operating expenditures are just beginning. These
benefits extend over the lifespan of the asset, supporting local
vitality through the creation of new jobs, generation of personal
income, and contribution to the local tax base year after year.
While commercial real estate is a national industry that hides
in plain sight, its role as a major source of economic activity,
jobs and personal earnings cannot be denied. B
To download BOMA International’s full economic impact study
and explore the role of commercial real estate in your state and
local market, visit www.BOMA.org/EconomicImpact.
John Salustri is Editor-in-Chief of Salustri Content Solutions, a
national editorial advisory firm based in East Northport, NY.
The Contributions of Office Building Operations to the Economy / 2016