Not surprisingly, a study on commercial real estate’s economic impact in Middle Tennessee has shown that the industry indeed has a major impact on the economy.
The report from the Nashville chapter of the National Association of Industrial and Office Properties showed that the industry had a direct impact last year of $1.5 billion on the 10-county region’s economy and directly supports more than 34,000 jobs.
Property taxes, however, represented the more important number, paying $479 million last year in the 10 counties, $294.8 million in Davidson County alone. The report showed that the industry paid 47.7 percent of all property taxes in the region.
According to the presentation, just under 10 percent of Davidson County’s land area is zoned for commercial use yet generates taxes representing about half of the Metro Schools’ budget.
The impact study is in a similar vein as the Nashville airport’s report last week citing its vital role in the economy here. And, there have been studies on the healthcare industry’s impact, the music industry’s impact, the impact of sports teams and on and on. Surprisingly, though, yesterday’s presentation attended by Mayor Karl Dean was short and lacked the hyperbole of many other studies.
What went unstated in the presentation is that commercial real estate is glue for any economy. Just as every person needs a place to live, every business needs real estate, whether it’s office, industrial or retail.
“The chief reason for us was internal info,” Tom Harwell, a NAIOP board member and a broker with Eakin Partners, said of why the study was conducted.
The group wanted the property tax figure but then took a deeper look. Harwell said it became clear quickly that there was a great deal of debate regarding using multipliers on direct spending. Some studies try to account for a trickle down effect in the economy, a controversial approach that usually leads to criticism.
Harwell said the decision was to focus on the property tax figure, a real number, and the direct spending.
“The real estate industry is lucky to have a hard number to point to,” he said.
Neighborhoods regularly beat up on real estate developers when they propose projects. And as the local chapter gets more active politically, its members had to know exactly what they have thought all along with property taxes.
Had the group looked more deeply, it could have pointed to sales taxes, too, both in equipment purchased for construction as well as new retail tenants in an area.