Amidst persistent high interest rates, building starts weaken, while nonbuilding starts show growth.

BEDFORD, MA —February 20, 2024 — Total construction starts grew 1% in January to a seasonally adjusted annual rate of $1.16 trillion, according to Dodge Construction Network. Nonbuilding starts rose 9% during the month, while nonresidential building starts fell 2% and residential starts were flat.

For the 12 months ending January 2024, total construction starts were down 1% from the 12 months ending January 2023. Nonresidential building starts were down 5% while residential starts were 8% lower, with nonbuilding starts up 17% on a 12 month rolling sum basis.

“Construction starts are struggling to make headway in the new year,” said Richard Branch, chief economist for Dodge Construction Network. “Construction starts will continue to struggle early on in 2024 as higher interest rates and tight credit standards are slowing down projects moving through the planning cycle to start. The Federal Reserve is expected to cut rates later this year. That will move some of these projects in the planning queue through to start and provide for a more stable rising trend in construction activity in the second half of the year.”

Nonbuilding

Nonbuilding construction starts in January rose 9% to a seasonally adjusted annual rate of $280 billion. Environmental public works starts rose 38%, while highway and bridge starts improved 9% and miscellaneous nonbuilding starts gained 4%. Utility/gas starts lost 35% in January.

For the 12 months ending January 2024 total nonbuilding starts were 17% higher than the 12 months ending January 2023. Highway and bridge starts were 11% higher, while environmental public works starts gained 10%. Utility/gas starts were 36% higher, while miscellaneous nonbuilding starts jumped 18% during the 12 months ending January 2024.

The largest nonbuilding projects to break ground in January were the $610 million Nelson Wastewater Treatment facility in Mission, Kansas, a $517 million wastewater treatment plant in Ewa Beach, Hawaii, and the $473 million I-10 bridge in Pensacola, Florida.

Nonresidential

Nonresidential building starts lost 2% in January to a seasonally adjusted annual rate of $483 billion. Commercial starts were 14% lower with hotel starts the only category to post a gain. Institutional starts were 1% lower with both education and healthcare down, while manufacturing starts rose 26%.

For the 12 months ending January 2024, nonresidential building starts were 5% lower than the previous 12 months. Manufacturing starts were down 20%, commercial starts were 10% lower, and institutional starts were 9% higher for the 12 months ending January 2024.

The largest nonresidential building projects to break ground in January were the $5.5 billion Texas Instruments fabrication plant in Lehi, Utah, the $2.6 billion Terminal B construction at George Bush Houston Airport in Houston, Texas, and the $1.0 billion BlueOval battery plant in Marshall, Michigan.

Residential

Residential building starts were flat from December to January at a seasonally adjusted annual rate of $393 billion. Multifamily starts improved 6% while single family starts lost 3%.

For the 12 months ending January 2024, residential starts were 8% lower than the previous 12 months.  Single family starts were 8% lower, while multifamily starts were 7% lower on a 12 month rolling sum basis.

The largest multifamily structures to break ground in January were the $1.5 billion One Beverly Hills tower in Beverly Hills, California, the $447 million Olara Condominium tower in West Palm Beach, Florida, and the $330 million The Exchange at Spring Hill Station in Tysons, Virginia.

Regionally, total construction starts in January rose in the West, but fell in all other regions.

Watch Chief Economist Richard Branch discuss January Construction Starts here.

January 2024 Construction Starts

 

 

 

 

 

 

 

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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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Nonresidential starts lead decline, dropping 29%

HAMILTON, NJ —December 20, 2023 — Total construction starts fell 15% in November, dropping to a seasonally adjusted annual rate of $927 billion, according to Dodge Construction Network. Nonresidential building starts fell 29% during the month, residential starts lost 6%, and nonbuilding starts dropped 2%.

Year-to-date through November 2023, total construction starts lagged by 4% compared to the previous year. Residential and nonresidential starts were down 14% and 7%, respectively, but nonbuilding starts were up 19%.

“Construction starts are deeply feeling the impact of higher rates,” said Richard Branch, chief economist for Dodge Construction Network. “While the Federal Reserve seems poised to start cutting rates in the New Year, the impact on starts will lag. As a result, starts are expected to be weak through the mid-point of 2024 before growth resumes.”

Nonbuilding

Nonbuilding construction starts in November fell 2%, amounting to a seasonally adjusted $223 billion. Highway and bridge starts decreased 8%, environmental public works starts fell 4%, utility/gas starts rose 17%, and miscellaneous nonbuilding starts improved by 1%.

Year-to-date through November, nonbuilding starts were up 19% overall. Utility/gas plants rose 49%, and miscellaneous nonbuilding starts increased 18%. Highway and bridge starts gained 9%, and environmental public works rose 11%.

The largest nonbuilding projects to break ground in November were the $834 million I-405 Brickyard to SR 527 improvements in Bothell, Washington, the $406 million second phase of the Sherco Solar Farm in Becker, New Mexico, and a $353 million addition to the Silverhawk Generating Station in Moapa, Nevada.

Nonresidential

Nonresidential building starts decreased 29% in November to a seasonally adjusted annual rate of $345 billion. Manufacturing starts plummeted 74% following a strong several strong project starts in October. Commercial starts fell 19% with office buildings being the only category to see a gain. Institutional starts rose 7% due to a significant uptick in healthcare activity. Year-to-date through November, total nonresidential starts were 7% lower than in 2022. Institutional starts gained 5%, while commercial and manufacturing starts fell 13% and 18%, respectively.

The largest nonresidential building projects to break ground in November were the $1.9 billion Children’s Hospital of Philadelphia Inpatient Tower in Pennsylvania, the $1.6 billion LG Energy Battery Plant in Queen Creek, Arizona, and the $750 million expansion of the Iowa Army Ammunition Plant in Middletown, Iowa.

Residential

Residential building starts declined 6% in November to a seasonally adjusted annual rate of $359 billion. Single family starts increased 1%, while multifamily starts fell 19%. Year-to-date through November 2023, total residential starts were down by 14%, with single-family starts dropping 15% and multifamily starts by 12%.

The largest multifamily structures to break ground in November were the $200 million 55 Broad Street residential conversion in New York City, the $200 million redevelopment of The Superman Building in Providence, Rhode Island, and the $185 million Union West mixed-use development in Raleigh, North Carolina.

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

Watch Chief Economist Richard Branch discuss November Construction Starts here.

November 2023 Construction Starts

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Nonresidential planning activity remains historically elevated despite decline

HAMILTON, N.J. – December 7, 2023 — The Dodge Momentum Index (DMI), issued by Dodge Construction Network (DCN), decreased 1% in November to 179.2 (2000=100) from the revised October reading of 181.7. Over the month, the commercial and institutional components both fell 1%.

“While both portions of the Momentum Index saw slower momentum in planning, overall levels remain steady and will support construction spending in 2024 and 2025,” stated Sarah Martin, associate director of forecasting for DCN. “Nonresidential planning activity will remain constrained from stronger growth amidst ongoing labor and construction cost challenges.”

Excluding data center activity, all commercial segments saw declines in November. On the institutional side, more momentum in healthcare and public projects was offset by continued weakness in education planning. Year over year, the DMI was 14% lower than in November 2022. The commercial segment was down 20% from year-ago levels, while the institutional segment was up 2% over the same time period.

A total of 17 projects valued at $100 million or more entered planning in November. The largest commercial projects include the $480 million Project Cosmo Data Center in Cheyenne, Wyoming, and the $300 million Sherwin Williams Headquarters Building in Cleveland, Ohio. The largest institutional projects include the $315 million phase two of the FSU Health Hospital in Tallahassee, Florida and the $258 million LA Convention Center Exhibition Hall in Los Angeles, California.

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 November’s DMI.

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The start of three megaprojects failed to overcome broad-based weakness

HAMILTON, N.J. – November 21, 2023 — Total construction starts fell 7% in October to a seasonally adjusted annual rate of $1.1 trillion, according to Dodge Construction Network. Nonbuilding and residential starts fell 32% and 1%, respectively. Conversely, nonresidential building starts gained 8% during the month.

Year-to-date through October 2023, total construction starts were 4% below that of 2022. Residential and nonresidential starts were down 15% and 7%, respectively; however, nonbuilding starts were up 20%. For the 12 months ending October 2023, total construction starts were down 1%. Nonbuilding starts were 22% higher, and nonresidential building starts gained 1%. On a 12-month rolling basis, residential starts posted a 15% decline.

“Construction starts have weakened over the last two months as high interest rates and tight credit have restrained activity,” said Richard Branch, chief economist for Dodge Construction Network. “While it seems likely that the Federal Reserve will hold off raising rates further, it will take time until they consider easing. This will likely result in a continued softening in construction starts over the next several months.”

Nonbuilding

Nonbuilding construction starts lost 32% in October, falling to a seasonally-adjusted $231 billion. A decline in utility/gas starts drove category starts to a 12-month low. Miscellaneous nonbuilding stars dropped 20%, and environmental starts were 15% lower. However, highway and bridge starts improved 6% in October. Year-to-date through October, nonbuilding starts were up 20% overall. Utility/gas plants rose 52%, and miscellaneous nonbuilding starts increased 18%. Highway and bridge starts gained 9%, and environmental public works rose 13%.

For the past 12 months ending in October 2023, total nonbuilding starts were 22% higher than in the 12 months ending in October 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 56% and 15%, respectively. Highway and bridge starts were up 11% and environmental public works starts were 15% higher on a

12-month rolling sum basis. Overall, the success in nonbuilding starts prevented further declines in the overall monthly starts values.

The largest nonbuilding projects to break ground in October were the $319 million Newton-Weston bridge replacement in Newton, Massachusetts, the $300 million Cadence Solar Center in York Township, Ohio, and the $280 million Estonian Solar project in Cooper, Texas.

Nonresidential

Nonresidential building starts rose 8% in October to a seasonally adjusted annual rate of $490 billion. The increase was led by the groundbreaking of several very large manufacturing plants during the month. If not for those plants total commercial starts would have lost 28%. Commercial starts dropped 18% during the month due to a very sharp pullback in office activity, while institutional starts fell 15%, despite a solid gain in healthcare starts. Year-to-date through October, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 4%, while commercial and manufacturing starts fell 10% and 20%, respectively.

For the past 12 months ending in October 2023, total nonresidential building starts were 1% higher than that ending October 2022. Manufacturing starts were 2% higher, institutional starts improved by 5%, and commercial starts lost 4%.

The largest nonresidential building projects to break ground in October were the $7.5 billion Micron semiconductor fabrication facility in Boise, Idaho, the $2.2 billion Hyundai/LG EV battery plant in Ellabell, Georgia, and the $1.5 billion Nucor Sheet Mill in Apple Grove, West Virginia.

Residential

Residential building starts fell 1% in October to a seasonally adjusted annual rate of $385 billion. Single family starts lost 2%, while multifamily starts were flat. On a year-to-date basis through October 2023, total residential starts were down 15%. Single family starts dropped 17%, and multifamily starts were down 12%.

For the 12 months ending in October 2023, residential starts were 15% lower than in 2022. Single family starts were 20% lower, while multifamily starts were down 7% on a rolling 12-month basis.

The largest multifamily structures to break ground in October were the $364 million QPX mixed-use tower in Long Island City, New York, the $350 million mixed-use building on W37th Street in New York, New York, and the $225 million first phase of the Baccarat Residences in Miami, Florida.

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

Watch Chief Economist Richard Branch discuss October Construction Starts here.

October 2023 Construction Starts

 

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Warehouse planning projects accelerating, supporting commercial momentum

HAMILTON, N.J. – November 7, 2023 — The Dodge Momentum Index (DMI), issued by Dodge Construction Network, increased 1% in October to 181.7 (2000=100) from the revised September reading of 180.3. Over the month, the commercial component of the DMI rose 2.0%, while the institutional component retreated 1.4%.

“Heightened momentum in warehouse planning activity supported the commercial side of the Index this month, while muted education planning activity slowed the institutional portion,” stated Sarah Martin, associate director of forecasting for Dodge Construction Network. “Overall levels of planning activity remain robust and will support construction spending over the next 12 to 18 months.”

Improvements in warehouse planning helped support commercial growth, but despite strong progress in September, education and healthcare activity slowed down this month. Year over year, the DMI was 8% lower than in October 2022. The commercial segment was down 14%, while the institutional segment was up 7%.

A total of 21 projects valued at $100 million or more entered planning in October. The largest commercial projects to enter planning included the $215 million Google Data Center in Kansas City, Missouri, and the $180 million Mauna Kea Beach Hotel in Waimea, Hawaii. The largest institutional projects to enter planning included the $400 million Grand Sierra Resort Arena in Reno, Nevada and $267 million renovation to Keller Auditorium in Portland, Oregon.

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

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

October 2023 DODGE MOMENTUM INDEX

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