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Even with Covid, commercial real estate development grew last year. But some metro areas are seeing more activity than others.
Despite the pandemic pushing more companies to offer remote work, new office construction increased between 2020 and 2021 in most parts of the country, according to a recent study. The uptick was part of a larger trend as commercial real estate construction in the U.S. has boomed since 2010, with the largest shares developed in southern metropolitan areas.
Nationally, commercial real estate—including office, retail and industrial spaces—grew 237% over the last decade, according to 42Floors, a real estate company. That includes more than 900 million square feet of new office construction.
There was more commercial construction completed in 2021 than in any of the previous 10 years, despite the pandemic’s disruptions to labor markets and supply chains, according to the study. But this new development was not spread evenly throughout the country.
For instance, since 2010, the South has been home to 39% of all new office construction, the largest share of any region. By comparison, only about 14% of newly completed office projects were in the Midwest. Twenty-seven percent were in the West and 19% in the Northeast.
Dallas and Houston topped the list of metro areas with the most commercial real estate development since 2010. The Atlanta, Washington, D.C. and Miami regions also ranked in the top 10.
While southern cities cumulatively built more new office space than any other region, New York City completed more of it than any other metropolitan area in the country. Since 2010, the Big Apple has seen more than 78 million square feet in new office space constructed, far exceeding Dallas’s roughly 49 million, the next highest on the list.
But in recent years, office construction has slowed in the northeast, which could mean southern cities further narrowing the gap with New York.
It’s not just office real estate where the South is seeing strong growth. The region was also ahead of all other parts of the country in industrial development, accounting for about 42% of new construction.
Development in the South has likely been driven by lower living costs, business-friendly policies, and vibrant communities that attract companies and workers, the report said.
While office and industrial construction has been on the upswing, retail has not fared as well. With online shopping booming in recent years, the construction of retail space fell 64% since 2010.