Reed Construction Data: January construction starts higher
March 1, 2010Reed Construction Data (RCD) announced that the value of construction starts in January 2010, excluding residential contracts, totaled $24.1 billion, 20.1 percent more than in January 2009. January starts were 6.3 percent higher than December starts. Both months suffered from unseasonably poor construction weather, which likely depressed starts as well as causing a large pickup in construction layoffs. The poor construction weather has continued through mid-February. January starts were 30 percent higher than the monthly average in the first half of 2009.
The value of construction starts each month is summarized from RCD’s database of all active construction projects in the United States, excluding single-family homes. Missing project values are estimated using RSMeans’ building cost models.
January starts increased 10 percent for non-residential buildings from December but only 2 percent for heavy construction projects. Both highway and water/sewer starts fell slightly, but there were offsetting gains for airports and power projects.
Starts jumped 47 percent for commercial buildings, reversing the large drop in November. The rebound included all types of commercial projects except parking garages. Institutional building starts, always a steadier market, increased 4 percent from December with significant gains for nursing homes, libraries/museums, educational facilities and government offices.
Manufacturing starts, which are heavily energy-related, plunged to only 15 percent of the 2009 monthly average. Total 2009 starts fell 18 percent for non-residential buildings but increased 14 percent for heavy projects.
Commercial starts continue to be restrained by the inability of some developers to obtain credit. This problem will worsen at least until mid-2010 as lenders continue to withdraw from real estate under pressure from rapidly rising commercial mortgage defaults. RCD expects this restraint to be more than offset by the rising expected profitability of commercial property when it is completed nine months or more ahead.
By contrast, the availability of financing for institutional buildings will not improve in the first half of 2010. Stimulus plan funding will not be significant until later in the year. Funding in regular budget appropriations is now declining at all levels of government. Hospital and higher education generate their own funding and will not be impacted by reduced government funds.
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