How US cities are performing in commercial, multifamily construction

Five of the top 10 metropolitan markets for commercial and multifamily construction starts ranked by dollar volume showed increased activity during the first half of 2018 compared with the same time period a year ago, reports Dodge Data & Analytics.

Also, 11 of the top 20 markets registered gains.

According to Dodge Data, the commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing.

Nationally, the volume of commercial and multifamily construction starts during the first half of the year was $101.4 billion, down 1 percent from last year’s first half, although still 2 percent above reported figures for the first half of 2016.

The 1 percent drop reflects an 8 percent retreat for commercial building that was essentially balanced by an 8 percent increase for multifamily housing, Dodge Data adds.

“Multifamily housing has proven to be surprisingly resilient so far during 2018, following its 8 percent decline in dollar terms at the U.S. level that was reported for the full year 2017,” says Robert Murray, chief economist for Dodge Data. “With apartment vacancy rates beginning to edge upward on a year-over-year basis, banks had been taking a more cautious stance towards lending for multifamily projects.

“Yet, after some loss of momentum during 2017, several factors appear to be providing near-term support for multifamily housing,” Murray adds. “The U.S. economy is currently moving at a healthy clip, with steady job growth bringing new workers into the labor force.  The demand for multifamily housing by millennials remains strong, given their desire to live in downtown areas, while the increasing price of a single-family home and diminished tax benefits may be dissuading some from making the transition to single-family home ownership.”

Market specifics 

The New York metro area, at $16.1 billion during the first half of 2018, held onto its top ranking, comprising 16 percent of the U.S. commercial and multifamily total. New York was helped by a 44 percent jump compared with a year ago.

Other markets in the top 10 showing growth during the first half of 2018 were Washington, D.C. ($5 billion), up 23 percent; Miami ($4.9 billion), up 34 percent; Boston ($3.7 billion), up 56 percent; and Seattle ($3.2 billion), up 7 percent.

Metropolitan areas showing decreased activity for commercial and multifamily construction starts during the first half of the year were Dallas-Fort Worth ($3.4 billion), down 23 percent; Los Angeles ($2.9 billion), down 38 percent; San Francisco ($2.8 billion), down 38 percent; Chicago ($2.7 billion), down 37 percent; and Atlanta ($2 billion), down 43 percent.

Of the markets ranked 11 to 20, the six that registered first-half gains were Austin, Texas ($1.8 billion), up 15 percent; Kansas City, Missouri ($1.7 billion), up 52 percent; Orlando, Florida ($1.6 billion), up 4 percent; Phoenix ($1.6 billion), up 19 percent; Minneapolis-St. Paul ($1.3 billion), up 34 percent; and Portland, Oregon ($1.1 billion), up 15 percent.

The four markets ranked 11 to 20 posting declines were Houston ($1.9 billion), down 13 percent; Philadelphia ($1.7 billion), down 13 percent; Denver ($1.6 billion), down 25 percent; and San Jose, California ($1.1 billion), down 37 percent.