First half 2017 construction starts show mixed pattern

By |  August 3, 2017

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During the first half of 2017, eight of the top 10 metropolitan markets for commercial and multifamily construction starts ranked by dollar volume registered decreased activity compared with one year ago, reports Dodge Data & Analytics. Despite this, metropolitan markets ranked 11 through 20 showed growth for nine of the 10 markets, as smaller areas are picking up the slack from decreased activity in cities that have typically led the commercial and multifamily segments.

According to Dodge Data & Analytics, at the national level, the volume of commercial and multifamily construction starts during the first half of 2017 was $87.5 billion, which is down 9 percent from the first half of 2016 and 1 percent above the first half of 2015.

The New York metropolitan area, at $10.5 billion in the first half of 2017, maintained its No. 1 ranking and comprised 12 percent of the U.S. commercial and multifamily total, but it was down 22 percent from a year ago, Dodge Data & Analytics says. Other metropolitan areas in the top 10 with double-digital declines in the first half of 2017 include Los Angeles, down 15 percent at $4.4 billion; Dallas-Fort Worth, Texas, down 29 percent at $3.2 billion; Boston, down 27 percent at $2.4 billion; and Seattle, down 23 percent at $1.9 billion. Chicago and Washington, D.C., both showed 1 percent declines, at $3.8 billion and $3.6 billion, respectively. San Francisco increased 48 percent to $4.5 billion and Atlanta increased 19 percent to $3.4 billion.

For the markets ranked 11 through 20 in the first half of 2017, the only decline was reported for Denver, at $1.8 billion, which was down 16 percent from a year ago. Houston was up 2 percent at $1.8 billion; Philadelphia was up 23 percent at $1.7 billion; Austin was up 14 percent at $1.5 billion; Baltimore was up 46 percent at $1.4 billion; Charlotte, North Carolina, was up 58 percent at $1.4 billion; Orlando, Florida, was up 28 percent at $1.4 billion; Sacramento, California, was up 659 percent at $1.1 billion; and San Antonio was up 5 percent at $1 billion.

The commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages and family housing. According to Dodge Data & Analytics, at the U.S. level, the 9 percent decline for commercial and multifamily housing during the first half of 2017 was due to a slower pace for multifamily housing, which dropped 18 percent while commercial building remained steady.

“Multifamily housing served as the leading edge of the current construction expansion, and increasingly it looks like it reached its peak in 2016,” says Robert Murray, chief economist for Dodge Data & Analytics. “Although it’s true that lenders are exercising greater caution toward multifamily projects, more construction is taking place in those markets which have been relative latecomers to the expansion, and this is helping to limit the extent of the multifamily slowdown now underway at the national level.”

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