Dodge: Construction starts rebound in September 2021

Total construction starts rose 10 percent in September to a seasonally adjusted annual rate of $889.7 billion, according to Dodge Construction Network.

All three sectors Dodge measures improved. Nonresidential building starts rose 15 percent, residential starts moved 9 percent higher and nonbuilding starts increased by 6 percent.

“Construction starts have struggled over the last three months as concerns over rising prices, shortages of materials and scarce labor led to declines in activity,” says Richard Branch, chief economist for Dodge Construction Network. “The increase in September, however, partially allays the fear that construction is headed for a free fall and shows that owners and developers are still ready to move ahead with projects. Starts are likely to continue to trend in a positive but sawtooth fashion in the coming months until a more balanced recovery takes hold next year.”

Nonbuilding construction

According to Dodge, nonbuilding construction starts rose 6 percent in September to a seasonally adjusted annual rate of $177.9 billion.

Miscellaneous nonbuilding starts (i.e., pipelines, site work) and environmental public works (i.e., water, sewers) each gained 29 percent, while highway and bridge starts gained less than 1 percent. On the downside, utility/gas plant starts dropped 53 percent.

On the year, Dodge says total nonbuilding starts were essentially unchanged through September. Environmental public works were 24 percent higher while highway and bridge starts were 2 percent lower. Miscellaneous nonbuilding fell 14 percent and utility/gas plant starts fell 10 percent during the first nine months of the year.

For the 12 months ending in September 2021, Dodge says total nonbuilding starts were 1 percent lower than the 12 months ending in September 2020. Environmental public works starts were 22 percent higher, and highway and bridge starts were up 3 percent. Utility and gas plant starts were down 20 percent, and miscellaneous nonbuilding starts were 16 percent lower on a 12-month rolling basis.

Dodge says the largest nonbuilding projects to break ground in September were the $500 million Whale offshore oil field pipeline near Houston, the $485 million Chimney Hollow Reservoir Dam in Berthoud, Colorado, and the $450 million repairs to docks at the United States Coast Guard Station in Fort Macon, North Carolina.

Nonresidential building

Nonresidential building starts rebounded in September, gaining 15 percent to a seasonally adjusted annual rate of $281.8 billion.

Commercial buildings rose 13 percent as starts improved for the hotel, warehouse and retail sectors. Office building starts fell. Institutional building starts rose 13 percent, with all sectors but public buildings improving over the month. Manufacturing starts jumped 47 percent following a particularly weak August.

In the first nine months of 2021, nonresidential building starts were 7 percent higher. Commercial starts increased 8 percent, manufacturing starts were 38 percent higher and institutional starts were up 2 percent.

For the 12 months ending in September 2021, nonresidential building starts were 1 percent lower than in the 12 months ending in September 2020. Commercial starts were down 1 percent, institutional starts rose 1 percent and manufacturing starts dropped 12 percent in the 12 months ending in September 2021.

The largest nonresidential building projects to break ground in September were the $670 million modernization program at Pittsburgh International Airport, the $658 million Irvine Campus Medical Complex in Irvine, California, and the $495 million Phillips 66 Sweeny Hub Fractionator in Sweeny, Texas.

Residential building

Residential building starts rose 9 percent in September to a seasonally adjusted annual rate of $430 billion.

Single-family starts gained 9 percent in September while multifamily starts increased by 24 percent. Through nine months, residential starts were 25 percent higher versus the same period of a year ago.

For the 12 months ending in September 2021, total residential starts were 22 percent higher than the 12 months ending in September 2020. Single-family starts gained 26 percent, and multifamily starts were up 10 percent on a 12-month sum basis.

According to Dodge, the largest multifamily structures to break ground in September were the $300 million Islablue Apartments in Long Beach, New York, the $256 million Station Square Apartments (phase 2A) in Ronkonkoma, New York, and the $215 million 906 West Randolph mixed-use project in Chicago.