The number one industry in America is real estate, and if people are buying real estate for development, then someone has to be building and renovating them. Due to this correlation, the health of both the construction and commercial real estate industries are a vital indicator of the overall strength of the United States’ economy.
The United States recession of 2008 took a toll on almost all industries and the world of construction and commercial real estate were not impervious. After all, when people are strapped for cash, they aren't exactly out there buying up new properties and expanding their businesses. Sure, buying low is a smart investment, but most are just waiting out the storm in a disastrous recession.
Quantitatively, the construction industry witnessed a loss of nearly 2.3 million jobs from 2006 through 2010. The industry has since rebounded to the tune of an additional 1.54 million jobs in the following six years alone. The steady growth over this time has been symbolic of a country on the mend — though, from a job creation standpoint, they’ve yet to fully recoup what they’ve lost.
Commercial real estate is an important industry in the United States because it is both a signal of economic growth and of job creation. Large construction jobs require many hands on deck and, upon completion, more jobs are needed as well. For example, once a property is sold or leased, the new tenants will likely be hiring and employing new people to work at their new location. Furthermore, the facilitation of the sale will likely be executed by real estate agent(s). Additionally, the new property may need a property manager, a maintenance team, and a janitorial team at the very least. This is all to say that the jobs add up pretty quickly and the small example above shows just why continued commercial real estate development is a positive sign for the nation’s economy.
As a source of job creation, commercial real estate is fairly easy to understand. However, as stated earlier, the industry also acts as a health indicator of the entire economy. When the economy is in good shape and growing, development is also at its peak. Whether it is development of raw land, old buildings, or new business opportunities, a booming development and commercial real estate industry signifies a healthy and well-situated economy.
According to current projections, the United States is in the midst of a ten-plus-year commercial real estate growth. This started in 2011 and is projected to continue into 2022-2023. The year of 2019 also looks to be one of the biggest years of growth in the industry. Thus, it is safe to assume that the commercial real estate and development industries are expanding rapidly and that comes as good news for the economy.
For a quick case study, let us look at the city of Atlanta, Georgia. Recently, Atlanta was named one of the fastest growing cities in the United States. From 2011 to 2016, Atlanta saw its population increase by an outstanding 7%. Atlanta continues to develop and their economy continues to thrive. For proof, look no further than the $1.6 billion Mercedes-Benz Stadium that was just built in 2016. This brand-new stadium was also home to the Super Bowl hosted earlier this month. Not only did the stadium create a ton of construction work but, being the host city for the Super Bowl, created a plethora of operational jobs for the event as well. And, while Super Bowl jobs were temporary, the overall point of an expanding commercial real estate economy creating more opportunities still stands.
The commercial real estate industry is traditionally a good forecasting model of the health, growth, and sustainability of an economy. As it stands right now, the United States is performing exceptionally from an economic standpoint and, if projections hold true, the future continues to look bright. While the industry hasn't yet replaced all of the jobs lost during the recession of 2008, the numbers are very close and certainly headed in the right direction.
Across the nation, cities and the companies that call them home are continuing to grow, develop, and expand. Commercial real estate provides opportunities for companies to grow and to create new jobs within their communities. In summary, if you want to know where the National economy is headed, just take a look at the construction and commercial real estate industries. If projections continue to show growth, then it is a safe bet to make that the United States economy is thriving.
