Dodge: Construction starts up in February

By |  March 22, 2023

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Total construction starts rose 6 percent in February to a seasonally adjusted annual rate of $912.8 billion, according to Dodge Construction Network.

In February, residential and nonresidential building starts rose 11 percent and 9 percent respectively, and nonbuilding starts declined 5 percent.

For the first two months of 2023, total construction starts were 17 percent below the first two months of 2022. Year over year, residential starts were down 31 percent, nonresidential starts were down 14 percent and nonbuilding starts gained 6 percent.

For the 12 months ending with this February, total construction starts were 9 percent higher than the 12 months ending with February 2022. Nonresidential and nonbuilding starts were 27 percent and 19 percent higher, respectively, in that time, while residential starts fell 9 percent.

“February construction starts were a mixed bag that led to marginal growth,” says Richard Branch, chief economist at Dodge Construction Network. “Single-family units posted a gain for the first time in 13 months, and manufacturing starts continued to be very robust, showing signs of promise early into 2023.

“However, the downturn in commercial and institutional building starts could very well be the beginning of an anticipated slowdown as the construction sector pulls back in the face of higher interest rates and lagging economic growth,” Branch adds. “While this ebbing should be comparatively mild, some construction verticals could face extreme stress as the year progresses.”

Nonbuilding

Nonbuilding construction starts fell 5 percent in February to a seasonally adjusted annual rate of $225 billion. This primarily resulted from a 30 percent decline in environmental public works starts and a 5 percent loss in highway and bridge starts.

Showing growth in the month were utility/gas plant starts (up 68 percent) and miscellaneous public works starts (up 6 percent).

For the 12 months ending with February 2023, total nonbuilding starts were 19 percent higher than the 12 months ending with February 2022. Utility/gas plant starts rose 23 percent, and highway bridge starts increased 17 percent in that time. Environmental public works and miscellaneous nonbuilding starts were up 19 percent and 18 percent, respectively, on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in February were the $1.2 billion Trumbull Energy Center combined-cycle natural gas plant in Warren, Ohio, the $540 million Merit SI Gulfstar solar farm in Wharton County, Texas, and the $530 million Mockingbird Solar Center in Brookston, Texas.

Nonresidential

Nonresidential building starts gained 9 percent in February to a seasonally adjusted annual rate of $368 billion. Driving the gain was a 218 percent gain in manufacturing starts due to the start of a large EV battery plant in Ohio.

Commercial starts fell 2 percent in February as office and parking structure starts decreased, offsetting increases in retail, hotels and warehouse activity. Institutional starts also fell during the month following a decline in education and healthcare projects.

On a 12-month rolling sum basis ending in February 2023, total nonresidential building starts were 27 percent higher than the same timeframe ending in February 2022. Manufacturing starts were 91 percent higher, and both institutional and commercial starts gained 18 percent on a 12-month rolling sum basis.

The largest nonresidential building projects to break ground in February were the $3.5 billion Honda EV battery plant in Jeffersonville, Ohio, the $1.4 billion expansion of Concourse D at Hartsfield Jackson Airport in Atlanta and the $500 million Apex-1 Sustainable Lithium-Ion battery plant in Hopkinsville, Kentucky.

Residential

Residential building starts rose 11 percent in February to a seasonally adjusted annual rate of $320 billion. Single-family and multifamily starts rose 4 percent and 22 percent respectively.

For the 12 months ending in February 2023, residential starts were 9 percent lower than the 12 months ending in February 2022. Single-family starts were 20 percent lower while multifamily starts were up 18 percent on a 12-month rolling sum basis.

The largest multifamily structures to break ground in February were a $350 million mixed-use building in New York, the $215 million Four Season condominium in Washington and the $140 million Palomar Heights mixed-use building in Escondido, California.

Jack Kopanski

About the Author:

Jack Kopanski is the Managing Editor of Pit & Quarry and Editor-in-Chief of Portable Plants. Kopanski can be reached at 216-706-3756 or jkopanski@northcoastmedia.net.

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