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Florida Again Ranks in Top 5 for CRE Development, Study Finds

Industry Created and Supported 155,926 Jobs Last Year in the Sunshine State
February 28, 2018
Florida remains among the top five states for commercial real estate development, according to a report Wednesday from NAIOP.

The Sunshine State's commercial real estate industry created and supported 155,926 jobs last year and also contributed $19.32 billion to the Gross Domestic Product, the study found. Florida maintained its No. 5 ranking from 2016.

Texas ranked No. 1 in the latest study, with 379,781 jobs and a $58.90 billion contribution to GDP. California, Pennsylvania and New York rounded out the Top 5.

"The importance of commercial development to the U.S. economy is well-established, and the industry’s growth is critical to creating new jobs, improving infrastructure, and creating places to work, shop and play," Thomas Bisacquino, NAIOP president and CEO, said in a statement. "Commercial real estate is a robust contributor to national and state economies, and NAIOP is dedicated to working with the administration, Congress and state legislators to develop bipartisan infrastructure investment incentives that empower our industry to expand."

The NAIOP Research Foundation publishes the annual study to measure the impact from development and operations of the commercial real estate industry.

Florida's direct construction spending was $9.26 billion, according to the report. By sector, Florida ranked second in retail behind only Texas, third for warehouses/flex space behind Texas and California and 10th for office.
As of the first quarter of 2018, Florida has nearly 32 million square feet of commercial space (office, industrial and retail) under construction, according to Pamela Stergios, South Florida analyst for CoStar Market Analytics.

Miami has the most new development. It’s the clear leader for all three property types -- office, retail and industrial -- with 9.1 million square feet currently under construction, Stergios said.

“Miami sees the most activity simply because it is the largest metro, but it has grown faster than the national average in population and overall job growth for 10 years now,” she said. “The biggest difference between Miami and other Florida metros is that Miami commands a premium in asking rents, and in a world of rising construction costs, this may make it more attractive and help more projects pan out there.”

Miami leads the state with 1.7 million square feet of office under construction, while Orlando is second at 1.5 million square feet, the CoStar data show. Tampa and Fort Lauderdale are third and fourth in terms of office and retail activity, although they both surpass Orlando for industrial activity.

"It goes without saying that commercial development in South Florida is tied in with residential development," said Malcolm Butters, president of Butters Construction & Development in Coconut Creek, FL. "When you have positive residential growth - and I think we're back to that magical number of 1,000 people a day are moving to Florida - that creates more and more opportunities for commercial."

Butters is a co-developer of The Hillsboro Technology Center, an industrial complex in Deerfield Beach, FL that will total 900,000 square feet when it's complete in 2020. The project is expected to create as many as 3,500 construction jobs and host about 1,500 permanent jobs.

The NAIOP report notes that rising interest rates in 2018 are among several factors expected to affect economic growth this year. Other factors include construction labor shortages and the new federal tax law.

"The No. 1 problem we are having now because there is a tremendous surge of construction activity is that labor and materials are becoming more expensive," Butters said.

Nationally, commercial real estate supported 7.6 million jobs nationwide last year and also contributed $935.1 billion to U.S. GDP, the study said. In 2017, 524 million square feet of office, retail, warehouse and industrial space started and will be able to house more than 1.3 million new workers, according to NAIOP.

Paul Owers, South Florida Market Reporter  CoStar Group   
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