During the first half of 2018, five of the top ten metropolitan markets for commercial and multifamily construction starts ranked by dollar volume showed increased activity compared to a year ago, according to Dodge Data & Analytics. Of the top twenty markets, eleven were able to register gains. At the national level, the volume of commercial and multifamily construction starts during the first half of 2018 was $101.4 billion, down 1% from last year’s first half, although still 2% above what was reported during the first half of 2016.
The New York NY metropolitan area, at $16.1 billion during the first half of 2018, held onto its number one ranking and comprised 16% of the U.S. commercial and multifamily total, helped by a 44% jump compared to a year ago. During the previous two years, the New York NY share of the U.S. total had slipped to 14% in 2016 and 13% in 2017, after seeing its share reach a peak at 19% back in 2015. Other markets in the top ten showing growth during the first half of 2018 were Washington DC ($5.0 billion), up 23%; Miami FL ($4.9 billion), up 34%; Boston MA ($3.7 billion), up 56%; and Seattle WA ($3.2 billion), up 7%. Of these markets, the top four (New York, Washington DC, Miami, and Boston) showed renewed growth after the decreased activity reported for the full year 2017, while Seattle was able to maintain the upward track present last year. Metropolitan areas showing decreased activity for commercial and multifamily construction starts during the first half of 2018 were Dallas-Ft. Worth TX ($3.4 billion), down 23%; Los Angeles CA ($2.9 billion), down 38%; San Francisco CA ($2.8 billion), down 38%; Chicago IL ($2.7 billion), down 37%; and Atlanta GA ($2.0 billion), down 43%.
For those markets ranked 11 through 20, the six that registered first half 2018 gains were Austin TX ($1.8 billion), up 15%; Kansas City MO ($1.7 billion), up 52%; Orlando FL ($1.6 billion), up 4%; Phoenix AZ ($1.6 billion), up 19%; Minneapolis-St. Paul MN ($1.3 billion), up 34%; and Portland OR ($1.1 billion), up 15%. The four posting declines were Houston TX ($1.9 billion), down 13%; Philadelphia PA ($1.7 billion), down 13%; Denver CO ($1.6 billion), down 25%; and San Jose CA ($1.1 billion), down 37%.
The commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing. At the U.S. level, the 1% drop for the commercial and multifamily total during the first half of 2018 reflected an 8% retreat for commercial building that was essentially balanced by an 8% increase for multifamily housing.
“Multifamily housing has proven to be surprisingly resilient so far during 2018, following its 8% decline in dollar terms at the U.S. level that was reported for the full year 2017,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “With apartment vacancy rates beginning to edge upward on a year-over-year basis, banks had been taking a more cautious stance towards lending for multifamily projects. Yet, after some loss of momentum during 2017, several factors appear to be providing near-term support for multifamily housing. The U.S. economy is currently moving at a healthy clip, with steady job growth bringing new workers into the labor force. The demand for multifamily housing by millennials remains
strong, given their desire to live in downtown areas while the increasing price of a single family home and diminished tax benefits may be dissuading some from making the transition to single family home ownership. As shown by this year’s surveys of bank lending officers conducted by the Federal Reserve, the extent of bank tightening for multifamily construction loans is not as widespread as a year ago.”
“On a broader level for commercial building, lending standards for nonresidential building loans have eased slightly over the past two quarters,” Murray continued. “And, the rollback of some of the Dodd-Frank restraints on the banking sector may encourage mid-size banks to increase lending for commercial real estate. While the expansion for commercial building and multifamily construction starts has clearly decelerated, the near-term shift appears to be one towards a plateau as opposed to a decline. This is consistent with the recent pattern for commercial and multifamily construction starts by major metropolitan areas, which reveals a fairly equal balance between those markets still showing gains and those markets showing decreased activity.”
Related Stories
Contractors | Jul 13, 2023
Construction input prices remain unchanged in June, inflation slowing
Construction input prices remained unchanged in June compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices were also unchanged for the month.
Contractors | Jul 11, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of June 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator remained unchanged at 8.9 months in June 2023, according to an ABC member survey conducted June 20 to July 5. The reading is unchanged from June 2022.
Market Data | Jul 5, 2023
Nonresidential construction spending decreased in May, its first drop in nearly a year
National nonresidential construction spending decreased 0.2% in May, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.06 trillion.
Apartments | Jun 27, 2023
Average U.S. apartment rent reached all-time high in May, at $1,716
Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. The average U.S. apartment rent reached an all-time high of $1,716 in May.
Industry Research | Jun 15, 2023
Exurbs and emerging suburbs having fastest population growth, says Cushman & Wakefield
Recently released county and metro-level population growth data by the U.S. Census Bureau shows that the fastest growing areas are found in exurbs and emerging suburbs.
Contractors | Jun 13, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of May 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator remained unchanged at 8.9 months in May, according to an ABC member survey conducted May 20 to June 7. The reading is 0.1 months lower than in May 2022. Backlog in the infrastructure category ticked up again and has now returned to May 2022 levels. On a regional basis, backlog increased in every region but the Northeast.
Industry Research | Jun 13, 2023
Two new surveys track how the construction industry, in the U.S. and globally, is navigating market disruption and volatility
The surveys, conducted by XYZ Reality and KPMG International, found greater willingness to embrace technology, workplace diversity, and ESG precepts.
| Jun 5, 2023
Communication is the key to AEC firms’ mental health programs and training
The core of recent awareness efforts—and their greatest challenge—is getting workers to come forward and share stories.
Contractors | May 24, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of April 2023
Contractor backlogs climbed slightly in April, from a seven-month low the previous month, according to Associated Builders and Contractors.
Multifamily Housing | May 23, 2023
One out of three office buildings in largest U.S. cities are suitable for residential conversion
Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.