Realty Times - It Doesn't Pay to Underestimate Commercial Real ...

It Doesn't Pay to Underestimate Commercial Real Estate

by PJ Wade

Media and governments are so preoccupied with the state of the residential real estate market that it's easy for all of us to overlook the fact that while this is a big real estate market, there's another one even bigger - the Commercial Real Estate (CRE) Sector.

How big is it?

According to the Real Property Association of Canada (REALpac), which represents leaders in investment real property (that's the legal term for land plus buildings and other improvements, under, on and in, the land):

The economic activity of the country's CRE Sector is described as more than twice that of the entire economy of Newfoundland & Labrador, including all its oil and gas.

The labour income created by the sector is more than twice that of Canada's agriculture, forestry, and fishing industries combined.

In 2011, the CRE Sector generated C$63.3 billion in economic activity, and benefited from capital investment totalling C$21.6 billion, which represented approximately half of the total spending on non-residential construction, according to "The Contribution of the Commercial Real Estate Sector to the Canadian Economy," a recent research report from the NAIOP (National Association for Industrial and Office Parks) Research Foundation and REALpac.

Both of these organizations are excellent commercial real estate information sources and education resources:

Reportedly, REALpac's less than 100 members currently own "in excess of C$180 Billion CAD in real estate assets located in the major centres across Canada." Members include real estate investment trusts, publicly traded and large private companies, banks, brokerages, crown corporations, investment dealers, life companies, lenders, and pension funds. The REALpac mission is to "collectively influence public policy, to educate government and the public, and to ensure stable and beneficial real estate capital and property markets in Canada." www.realpac.ca

The National Association for Industrial and Office Parks (NAIOP) represents real estate development, investment, and operations professionals and organizations interested in office, industrial, retail, and mixed-use properties. NAIOP provides advocacy, education, and business opportunities for members through a North American network. NAIOP, which supports the Research Foundation as an industry think tank, provides members "with the highest level of research information on how real properties, especially office, industrial, and mixed-use properties, impact and benefit communities throughout North America." www.naiop.org

Even though the CRE Sector often takes a back seat in popular, celebrity-crazed mainstream media, online and off, commercial real estate contributes to the economy in ways that touch most Canadians, and provide opportunity for many:

Supporting 340,000 jobs, many of which are high-paying professional occupations;

Generating C$18.1 billion in personal income, related to labour income and other sources of income;

Earning C$12.5 billion in corporate profits by many small and medium companies, as well as some of the largest pension funds and insurance companies;

Contributing C$7.2 billion in personal and corporate federal and provincial income tax revenues;

Spending almost C$15 billion on new buildings while another nearly C$7 billion went to upgrades, improvement, and renovation of existing buildings;

Accounting for $32.4 billion in total net contribution to Canada's GDP, which is more than the total GDP of New Brunswick.

The CRE Sector also benefits the national economy by promoting economic development, "housing" businesses, and paying realty tax across the country. Many people connect with the CRE Sector through their workplace while even greater numbers eat, shop, and play in buildings and shopping complexes developed by commercial real estate professionals and companies.

What happens to residential real estate matters, but there's a lot more going on around us than we may hear about unless we tune into business news at least as often as, or perhaps more often than, we do hockey scores.

Published: October 2, 2012

Use of this article without permission is a violation of federal copyright laws.

Futurist and Strategist PJ Wade is "The Catalyst" - intent on "Challenging The Best to Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action?in business and in life. Author of 8 books and more than 1800 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy...Your Choice!", which is filled with suggestions and cautions on protecting, building and managing home equity. Her new business book, "What's Your Point?: Cut The Crap, Hit The Mark & Stick!" will be published in 2012. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors - and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking - a talent she regularly demonstrates in this column. For more on keynotes, blogs, books and information on a range of 21st-Century topics, visit TheCatalyst.com.

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Source: http://realtytimes.com/rtpages/20121002_commercialRE.htm

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