Dodge: Total construction starts decline in March 2022

Despite a drop in total construction starts in March, following a large gain in February, optimism remains for 2022, according to Dodge Construction Network. Photo: oksanaphoto/iStock / Getty Images Plus/Getty Images

Total construction starts fell 12 percent in March to a seasonally adjusted annual rate of $903.8 billion, according to Dodge Construction Network.

Nonresidential building starts lost 29 percent, in part due to the start of three large manufacturing facilities in the prior month. When those three large projects are removed, nonresidential starts in March would have risen 10 percent. Residential starts fell 3 percent, and nonbuilding starts lost 2 percent.

Year-to-date, total construction was 9 percent higher in the first three months of 2022 than in the same period of 2021.

Nonresidential building starts rose 26 percent in the first three months of the year, residential starts gained 3 percent and nonbuilding starts were 1 percent lower in that time. For the 12 months ending March 2022, total construction starts were 15 percent above the 12 months ending March 2021. Nonresidential starts were 25 percent higher in that time, residential starts gained 15 percent and nonbuilding starts were down 1 percent.

“The volatility caused by the ebb and flow of large projects masks an underlying trend of strengthening in construction starts,” says Richard Branch, chief economist for Dodge Construction Network. “Nonresidential construction has benefited from the growing confidence that the worst of the pandemic is in the rear-view window. The pipeline of projects waiting to start continues to fill, suggesting this trend will continue. However, higher prices and a shortage of skilled labor will slow the progress of those projects through the design and bidding stages, resulting in moderate growth in starts activity.”

Nonbuilding

Nonbuilding construction starts dropped 2 percent in March to a seasonally adjusted annual rate of $194.5 billion.

Starts in the environmental public works category rose 35 percent and miscellaneous nonbuilding improved 10 percent, while starts for highway and bridge projects lost 7 percent, and utility and gas plant starts dropped 40 percent in March.

For the 12 months ending March 2022, total nonbuilding starts were 1 percent lower than in the 12 months ending March 2021.

In that time, environmental public works starts were up 11 percent, and utility and gas plant starts rose 2 percent. Highway and bridge starts were up 4 percent on a 12-month rolling sum basis, while miscellaneous nonbuilding starts were 30 percent lower.

The largest nonbuilding projects to break ground in March were the $522 million second phase of the IH 35E Corridor project in Dallas, the $475 million first phase of the Mammoth Solar Project in Starke and Pulaski counties, Indiana, and the $332 million I-17 Anthem Way traffic interchange in Phoenix.

Nonresidential

Nonresidential building starts fell 29 percent in March to a seasonally adjusted annual rate of $274.8 billion.

The decline in March followed a large gain in manufacturing activity in February, which saw three large plants break ground. In March, commercial starts rose 8 percent due to gains in office, hotel and warehouse starts. Institutional starts increased 9 percent in March as starts in all sectors moved higher.

For the 12 months ending March 2022, nonresidential building starts were 25 percent higher than in the 12 months ending March 2021. Commercial starts were up 21 percent, institutional starts rose 12 percent and manufacturing starts boomed 162 percent on a 12-month rolling sum basis.

The largest nonresidential building projects to break ground in March were the $505 million second phase of the Switch SuperNap data center in Sparks, Nevada, the $460 million second phase of the Park 303 office building in Glendale, Arizona, and upgrades to the $410 million Exxon Mobil refinery in Baton Rouge, Louisiana.

Residential

Residential building starts fell 3 percent in March to a seasonally adjusted annual rate of $435 billion.

Single family starts fell 5 percent, but multifamily starts rose 4 percent.

For the 12 months ending March 2022, residential starts improved 15 percent from the 12 months ending March 2021. Single family starts were 11 percent higher, while multifamily starts were 29 percent stronger on a 12-month rolling sum basis.

The largest multifamily structures to break ground in March were the $212 million 550 10^th Ave. mixed-use building in New York, the $200 million Kauanoe O Koloa condominiums in Koloa, Hawaii, and the $140 million 7 Platt St. mixed-use building in New York.

Regionally, total construction starts in March rose in the South Atlantic, but fell in all other regions.