Dodge: Construction starts slip to start 2023

By |  March 2, 2023

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Total construction starts fell 27 percent in January to a seasonally adjusted annual rate of $865.6 billion, according to Dodge Construction Network.

In January, nonresidential building starts fell 38 percent, residential starts lost 20 percent and nonbuilding starts declined by 16 percent.

Comparatively, total construction was 14 percent lower in January 2023 versus January 2022. Nonresidential building starts were down 2 percent, nonbuilding starts rose 10 percent and residential starts lost 34 percent.

For the 12 months ending January 2023, Dodge says total construction starts were 13 percent higher than the 12 months ending January 2022. Nonresidential starts were 36 percent higher, residential starts lost 6 percent and nonbuilding starts were up 19 percent.

“January’s decline in construction starts should not be taken as the beginning of a cyclical downturn in the industry,” says Richard Branch, chief economist at Dodge Construction Network. “Numerous mega projects have begun over the last few months, obscuring the underlying trend in construction activity. While some construction sectors will face stress as the year progresses, current fundamentals point to an industry that is fairly well positioned to weather the storm.”

Nonresidential

Nonresidential building starts lost 38 percent in January to a seasonally adjusted annual rate of $340 billion.

Manufacturing starts led the pullback in January, falling 91 percent following the start of several large projects in December. In January, commercial starts dropped 11 percent, with office being the only category to post a gain. Institutional starts increased by 3 percent thanks to a large gain in education starts.

The largest nonresidential building projects to break ground in January were the $1 billion Prime Data Center campus in Elk Grove Village, Illinois, the $515 million Amazon data center in Hilliard, Ohio, and the $460 million CoStar Group corporate campus in Richmond, Virginia.

Residential

Residential building starts fell 20 percent in January to a seasonally adjusted annual rate of $289.2 billion. Single-family starts lost 5 percent, and multifamily starts fell 37 percent.

The largest multifamily structures to break ground in January were a $200 million mixed-use building in Gowanus, New York, a $172 million mixed-use building in Greenpoint, New York, and the $150 million The Cove residential community in Sacramento, California.

Nonbuilding

Nonbuilding construction starts fell 16 percent in January to a seasonally adjusted annual rate of $237 billion.

Behind the decline was a 76 percent drop in utility/gas plant starts following a brisk December.

Elsewhere, environmental public works starts rose 22 percent, miscellaneous nonbuilding increased 17 percent, and highway and bridge starts rose 1 percent.

The largest nonbuilding projects to break ground in January were the $750 million High Banks wind farm in Belleville, Kansas, the $570 million first phase of the Highway 69 express toll lanes in Overland Park, Kansas, and the $492 million CEPP/EAA reservoir in Palm Beach, Florida.

Kevin Yanik

About the Author:

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

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