Joint University Study Finds Commercial Real EstateSector Accounts for More Than Ten Percent of...

Commercial Real Estate Generated $23.4 Billion in 2006 Economic Impact, with Almost 70 Percent Coming from Existing Properties

DENVER -- Construction, operation and maintenance of commercial real estate properties represents a significant and largely stable portion of Colorado's economy,

Independent research commissioned by the Colorado chapter of the National Association of Industrial and Office Properties, or NAIOP-Colorado, found that the state's commercial real estate sector generated $24.3 billion in direct and indirect output in 2006, which was considered a slightly lower than average year due to a downturn in construction. The study was conducted as a joint project by University of Colorado Real Estate Center and University of Denver Franklin L. Burns School of Real Estate. Findings were also reviewed by Colorado State University Everitt Real Estate Center.

"Our intent was to apply the highest standards of research methodology toward creating a realistic, comprehensive report specifically focused on commercial real estate construction and existing assets," said 2007 NAIOP-Colorado President Jim Mulligan. "The findings underscore not only the industry's significance as one of the state's largest economic drivers, but also the leadership role that we must continue to provide toward helping Colorado's growing communities support job growth and quality of life."

The study found that almost 70 percent of Colorado's commercial real estate sector jobs, taxes and other industry-related revenues come from maintaining and operating existing industrial properties, office buildings, hotels and resorts.

"While new development may adjust with economic conditions and community desires, existing properties are assets that must be continuously maintained and operated, even while seeking tenants," said Mulligan. "The commercial real estate that exists today represents a reliable foundation of tax revenues, jobs and local spending."

NAIOP-Colorado's report calculated the total economic impact by combining all direct and indirect spending related to construction, operations and maintenance of commercial properties, then applying regional "input and output multipliers" as established by the US Department of Commerce Bureau of Economic Analysis. The multipliers were not applied to finance or transaction costs.

The report details economic impacts separately for existing properties, tenant improvements, new construction, transactions, refinancing and for the impact of property and sales taxes. In addition to economic impact data for the entire state, the report also provides breakouts for eight regions and each county.

Highlights from NAIOP-Colorado's report on the 2006 economic impact of commercial real estate include:

* Direct spending was $12.3 billion, or 5.4% of the Colorado economy

* Total output was $24.3 billion, or 10.5% of the Colorado economy

* 137,832 people were directly employed with average annual wages of $32,177

* Income-producing property construction generated $3.3 billion in direct spending and $6.9 billion in total economic output

* Commercial properties - not including multifamily units - paid $1.18 billion in property taxes alone

* Sales tax on construction materials were $75.2 million, with a total economic impact of $160.7 million

The joint research project was headed by Professor Thomas G. Thibodeau, Ph.D. of the University of Colorado Real Estate Center, and Professor Glenn R. Mueller, Ph.D. of the University of Denver Franklin L. Burns School of Real Estate and Construction Management. Professor Steven Laposa, Ph.D. of Colorado State University Everitt Real Estate Center provided additional review. Data was provided by McGraw Hill Construction Research & Analytics, and by Real Capital Analytics, Inc.

NAIOP-Colorado is the fifth-largest chapter of the National Association of Industrial and Office Properties (NAIOP), the nation's leading trade association for developers, owners, investors and other professionals in industrial, office, retail and mixed-use commercial real estate. The organization provides support, leadership and professional education, diversity programs and advocacy in promoting responsible development and property management.

For more information and to request a full copy of the 2006 economic impact report, visit NAIOP-Colorado at www.naiop-colorado.org or call (303) 782-0155.