GlobeSt.com: At $1.1Tr, Multifamily's Economic Contribution is Hefty
February 14, 2013
For as much attention as the single-family residential housing market as been getting, it may seem like the apartment industry is the oft-ignored stepchild. Yet a recent report from the National Multi Housing Council and National Apartment Association finds that the multifamily rental sector plays an even larger role in the overall US economy than one might expect.
Apartments—and those living in them—contributed $1.1 trillion to the national economy in 2011, even in the midst of a weak economy. In other words, the industry contributed more than $3 billion to the economy on a daily basis. The sector also supported 25.4 million jobs.
The study is based on research done by Stephen S. Fuller, an economist with George Mason University’s Center for Regional Analysis. It covers the economic contribution of apartment construction, operations and resident spending on a national level plus all 50 states. The report also looks at construction and operations data for metro Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Miami, New York City, Philadelphia, Seattle and Washington, DC.
“Although attention is usually focused on homebuilding and the single-family sector, the annual construction and operating outlays for apartment buildings with five or more units are major sources of economic activity, jobs and personal earnings,” says Fuller. “In addition, the residents of apartment buildings constitute an important source of local, state and national economic activity as their spending for goods and services is recycled through the economy. Like the operating outlays for apartment buildings, the spending by renters recurs annually thereby supporting local economies on an ongoing basis.”
NMHC chairman and The Bozzuto Group chairman Thomas S. Bozzuto adds, “With up to seven million new renter households forming this decade—almost half of all new households—the dollars and jobs we add to the economy will only grow in magnitude.”
On construction alone, the apartment segment spent $14.8 billion in 2011— a year in which only 130,000 new units were delivered, compared to the average pre-recession count of around 270,000 completions. Add to that figure operations, which cost $67.9 billion in 2011, more than four times the amount spent on construction. Altogether, these aspects of the multifamily industry contributed $182.6 billion to the economy, supporting 2.3 million total jobs.
Meanwhile, the country’s 35 million apartment residents contributed handsomely to the economy, spending $421.5 billion on goods and services in 2011. Seventy percent of that total remained within the local economy, and those expenditures created a total economic impact of $885.2 billion supporting 22.8 million jobs across the country.
“For the first time we’re able to quantify the tremendous economic impact of apartment residents across the country, in addition to the powerful contributions from apartment construction and operations,” says NAA chairman Alexandra Jackiw, who is a managing director with McKinley. “It truly shows a comprehensive view of the industry’s critical role not just in housing, but to the economy at large.”