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Construction starts down overall, but nonbuilding up big

By |  March 17, 2021

Total construction starts fell 2 percent in February to a seasonally adjusted annual rate of $797.3 billion.

Nonbuilding construction starts posted a solid gain after rebounding from a weak January, but residential and nonresidential building starts declined, leading to a pullback in overall activity. The Dodge Index fell 2 percent in February to 169 from January’s 171.

“With spring just around the corner, hope is building for a strong economic recovery fueled by the growing number of vaccinated Americans,“ says Richard Branch, chief economist for Dodge Data & Analytics. “But the construction sector will be hard-pressed to take advantage of this resurgence, as rapidly escalating materials prices and a supply overhang across many building sectors weighs on starts through the first half of the year.”

Nonbuilding construction

Nonbuilding construction starts gained 20 percent in February to a seasonally adjusted annual rate of $200.3 billion.

The miscellaneous nonbuilding sector – largely pipelines and site work – surged 76 percent, while environmental public works increased 26 percent and highway and bridge starts moved 11 percent higher.

By contrast, utility and gas plant starts lost 17 percent in February.

For the 12 months ending in February, total nonbuilding starts were 13 percent lower than the 12 months ending in February 2020. Highway and bridge starts were 4 percent higher on a 12-month rolling sum basis, while environmental public works were up 1 percent. Miscellaneous nonbuilding fell 26 percent, and utility and gas plant starts were down 37 percent for the 12 months ending this February.

The largest nonbuilding projects to break ground in February were the $2.1 billion Line 3 Replacement Program (a 337-mile pipeline in Minnesota), the $1.2 billion Red River Water Supply Project in North Dakota, and the $950 million New England Clean Energy Connect Power Line in Maine.

Nonresidential building

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Nonresidential building starts fell 7 percent in February to a seasonally adjusted annual rate of $208.1 billion.

Institutional starts dropped 8 percent during the month despite a strong pickup in health care. Warehouse starts fell back during the month following a robust January, offsetting gains in office and hotel starts, as well as dragging down the overall commercial sector by 8 percent.

For the 12 months ending this February, nonresidential building starts dropped 28 percent compared to the 12 months ending February 2020. Commercial starts declined 30 percent, institutional starts were down 19 percent and manufacturing starts slid 58 percent in the 12 months ending this February.

The largest nonresidential building projects to break ground in February were Ohio State University’s $1.2 billion Wexner Inpatient Hospital Tower in Columbus, Ohio; ApiJect Systems’ $785 million Gigafactory in Durham, North Carolina; and Sterling EdgeCore’s $450 million data center in Sterling Virginia.

Residential building

Residential building starts slipped 7 percent in February to a seasonally adjusted annual rate of $388.9 billion.

Both single-family and multifamily starts fell during the month, with each losing 7 percent.

For the 12 months ending this February, total residential starts were 4 percent higher than the 12 months ending in February 2020. Single-family starts gained 12 percent, while multifamily starts were down 15 percent on a 12-month sum basis.

The largest multifamily structures to break ground in February were Bronx Point’s $349 million mixed-use development in The Bronx, New York; the $215 million Broadway Block mixed-use building in Long Beach, California; and the $200 million GoBroome mixed-use building in New York.

Kevin Yanik

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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