Year-end surge prevails against high rates and limited credit accessibility

BEDFORD, MA —January 18, 2024 — Total construction starts grew 20% in December to a seasonally adjusted annual rate of $1.12 trillion, according to Dodge Construction Network. Nonresidential building starts rose 37% during the month, while residential starts gained 8% and nonbuilding starts improved by 13%.

For the full year of 2023, total construction starts lost 4% compared to the previous year. Residential and nonresidential starts were down 13% and 8%, respectively, but nonbuilding starts were up 16%.

“Construction starts ended the year on a positive note,” said Richard Branch, chief economist for Dodge Construction Network. “Looking ahead, the new year provides promise that positive momentum will continue to build. The planning queue is stabilizing, and the promise of lower rates should spur construction onward. While hurdles remain, including scarce labor and tight credit, 2024 should be a more positive year for the construction sector.”

Nonbuilding
Nonbuilding construction starts in December rose 13% to a seasonally adjusted annual rate of $253 billion. Starts were up in each category; miscellaneous nonbuilding starts gained 27%, utility/gas plants rose 15%, highway and bridge starts improved by 12%, and environmental public works were up 8%. For the full year 2023, nonbuilding starts were up by an overall 16%. Utility/gas plants rose 35% and miscellaneous nonbuilding starts increased 19%. Highway and bridge starts and environmental public works each rose 9%.

The largest nonbuilding projects to break ground in December were the $1.3 billion Faraday Solar project in Elberta, Utah, the $425 million San Juan 1 solar farm in Farmington, New Mexico, and the $300 million renovation of the David Booth Kansas Memorial Stadium in Lawrence, Kansas.

Nonresidential

Nonresidential building starts rebounded in December, gaining 37% from November to a seasonally adjusted annual rate of $479 billion. Manufacturing starts gained 75%, commercial starts rose 48% with all categories seeing sizeable gains. Institutional starts rose 22% with increases in education, public buildings, and recreation offsetting a decline in healthcare starts. In 2023, total nonresidential starts were 8% lower than in 2022. Institutional starts gained 7%, while commercial and manufacturing starts fell 12% and 27%, respectively.

The largest nonresidential building projects to break ground in December were the $2.7 billion Texas Instruments fabrication plant in Sherman, Texas, the $1.1 billion OxyChem Project Orca in La Porte, Texas, and the $815 million University of Chicago Cancer Center in Chicago, Illinois.

Residential

Residential building starts grew 8% in December to a seasonally adjusted annual rate of $391 billion. Single family starts increased 1%, while multifamily starts rose 22%. In 2023, total residential starts were down by 13%, with single-family starts dropping 13%, and multifamily starts by 12%.

The largest multifamily structures to break ground in December were the $430 million Auberge South Beach Condo project in Miami Beach, Florida, the $325 million 2600 Biscayne mixed-use project in Miami, Florida, and the $300 million mixed-use project at 55 Hudson St in Jersey City, NJ.

Regionally, total construction starts in December rose in the Midwest, South Atlantic, and West regions, but fell in the Northeast.

Watch Chief Economist Richard Branch discuss December Construction Starts here.

December 2023 Construction Starts

 

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Nonresidential planning activity remains robust going into 2024

BEDFORD, M.A. – January 8, 2024 — The Dodge Momentum Index (DMI), issued by Dodge Construction Network, rose 3% in December to 186.6 (2000=100) from the revised November reading of 181.5. Over the month, commercial planning grew 1.0% and institutional planning improved 6.1%.

“The Momentum Index ended the year 11% below the November 2022 peak, ultimately stabilizing as the year progressed. Regardless, the DMI averaged a reading of 184.3 in 2023, hitting levels of activity that haven’t been recorded since 2008,” stated Sarah Martin, associate director of forecasting for Dodge Construction Network. “While ongoing labor and construction cost issues will persist in 2024, a substantive amount of projects are sitting in the planning queue and will support construction spending going into 2025.”

Hotel and data center planning drove growth in the commercial segment of the DMI over the month of December, while stronger healthcare and public building planning supported more momentum on the institutional side. Year over year, the DMI was 2% lower than in December 2022. The commercial segment was down 9% from year-ago levels, while the institutional segment was up 14% over the same time period.

A total of 23 projects valued at $100 million or more entered planning in December, with six valued over $400 million. The largest commercial projects include the $500 million Universal Theme Park Kids Resort and Hotel in Frisco, Texas, and the $400 million Dog River Industrial Park in Mobile, Alabama. The largest institutional projects include two Mayo Clinic buildings, each valued at $400 million, in Rochester, Minnesota.

The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.

Watch Associate Director of Forecasting Sarah Martin discuss December’s DMI here.

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Institutional planning continues to accelerate, while commercial planning ticks down

BEDFORD, M.A. – February 7, 2024 — The Dodge Momentum Index (DMI), issued by Dodge Construction Network (DCN), rose 0.1% in January to 184.1 (2000=100) from the revised December reading of 183.9. Over the month, commercial planning fell 1.0% and institutional planning improved 2.1%.

“Divergent trends between commercial and institutional planning continued in January, nullifying any growth on the overall Momentum Index,” stated Sarah Martin, associate director of forecasting for DCN. “Nevertheless, lending standards begun to loosen in January and the Fed is expected to begin cutting rates in the back half of the year. With this in mind, momentum should resume in commercial activity throughout 2024 as owners and developers gain confidence in market conditions for 2025.”

Slower growth in warehouse planning pulled down the commercial portion of the Index this month, while steady education and healthcare planning supported growth on the institutional side. Year over year, the DMI was 3% lower than in January 2023. The commercial segment was down 12% from year-ago levels, while the institutional segment was up 15% over the same period.

A total of 15 projects valued at $100 million or more entered planning in January. The largest commercial projects included the $200 million renovation of the historic Magnolia Hotel in Dallas, Texas, and the $169 million Microsoft Data Center in Leesburg, Virginia. The largest institutional projects included the $224 million NREL laboratory in Golden, Colorado and the $223 million Wichita State University Biomedical building in Wichita, Kansas.

The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.

Watch Associate Director of Forecasting Sarah Martin discuss January’s DMI here.

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