Dodge Data: Construction starts down significantly in first half of 2020

Dodge Data’s findings from the first half of 2020 show that construction starts of commercial buildings and multifamily housing are down rather dramatically compared with the same period of 2019. Click to enlarge | Chart: Dodge Data & Analytics

Dodge Data & Analytics released its findings on construction starts from the first half of the year, sharing that the pandemic and resulting recession wreaked havoc on U.S. building markets.

According to Dodge, commercial and multifamily starts were quite healthy in January and February, but stalled as the pandemic hit the nation in March. For the first three months of the year, multifamily and commercial building starts inched up 1 percent from the same period of 2019.

The commercial and multifamily group is comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing, Dodge says. Not included in the ranking are institutional building projects, such as educational facilities, hospitals, convention centers, casinos and transportation terminals, manufacturing buildings, single-family housing, public works and electric utilities/gas plants.

According to Dodge Data, the full force of the pandemic bore down on U.S. construction starts in April as economic activity virtually shut down and local restrictions on construction took effect. Construction resumed in some areas in May, allowing starts to post a mild gain over the month.

Advances continued in June, but the damage to commercial and multifamily construction during the first half of the year was palpable. Starts plunged 22 percent below the first half of the year, with only warehouse construction posting a very small gain. Commercial and multifamily construction starts in the top 20 metropolitan areas posted a similar drop of 22 percent through the first six months of 2020.

“The COVID-19 pandemic and recession have devastated most local construction markets,” says Richard Branch, chief economist at Dodge Data & Analytics. “Across the board, building projects have been halted or delayed with virtually no sector immune from damage. Construction starts have begun to increase from their April lows, and there is cautious optimism that as the year progresses construction markets around the country will begin a modest recovery.

“However, the recent acceleration of COVID-19 cases in the South and West, as well as the upcoming expiration of expanded unemployment insurance benefit, puts the recovery at significant risk and could undermine the construction sector’s ability to grow,” Branch adds.

Starts in top metro areas

Commercial building and multifamily housing starts are down dramatically in Seattle, which ranks 13th on Dodge Data’s list of the top 20 metro areas in terms of construction starts. Photo: oksanaphoto/iStock / Getty Images Plus/Getty Images

In the top 10 metro areas, commercial and multifamily starts slid 21 percent and only one metro area posted an increase.

The New York metro held on to its top spot despite falling 24 percent below year-ago levels to $11.5 billion. Washington, D.C., held on to second place even though commercial and multifamily construction starts fell 42 percent to $4.2 billion.

The Dallas metro area rounded out the top three, with commercial and multifamily activity dropping just 2 percent to $3.8 billion.

The remaining markets in the top 10 were Los Angeles (down 18 percent to $3.3 billion), Chicago (down 9 percent to $3 billion), Boston (down 31 percent to $3 billion), Miami (down 16 percent to $2.8 billion), Phoenix (up 82 percent to $2.8 billion), Austin (down 12 percent to $2.4 billion), and Houston (down 38 percent to $2.4 billion).

Among the metro areas ranked 11 to 20, commercial and multifamily starts plummeted 25 percent with just one metro area posting an increase. These metros included Atlanta (down 32 percent to $2.4 billion), Philadelphia (down 25 percent to $2.1 billion), Seattle (down 26 percent to $1.6 billion), Orlando (down 28 percent to $1.3 billion), Nashville, Tennessee (down 45 percent to $1.3 billion), Portland, Oregon (down 33 percent to $1.1 billion), Denver (down 15 percent to $1.1 billion), Kansas City, Missouri (down 20 percent to $1.1 billion), Tampa, Florida (down 19 percent to $941 million), and Detroit (up 96 percent to $929 million).