New construction starts jump 14% in September
The value of construction starts surged 14 percent from August to a seasonally adjusted rate of $814.8 billion in September, according to Dodge Data & Analytics.
“The pattern of construction starts on a monthly basis has occasionally been subject to ‘spikes’, due to the presence of unusually large projects in a given month, and September certainly qualifies as one of those monthly ‘spikes’,” said Robert Murray, chief economist for Dodge Data & Analytics. “Looking at the data on a quarterly basis helps to ease the volatility present in the monthly statistics, and it shows the third quarter rebounding 8 percent after a 9 percent decline in the second quarter, returning the level of activity to within 2 percent of the strong pace achieved during the first three months of this year. As the current expansion for construction has matured, there’s been more of an up-and-down pattern on a quarterly basis, including what’s been reported so far during 2017. What does stand out about the construction industry in 2017 is the strength shown by nonresidential building, led by such institutional project types as transportation terminals and educational facilities. On the commercial side, office buildings and warehouses continue to see growth, although hotel construction appears to have peaked and store construction has generally weakened. And, with this year’s pickup in petrochemical plant starts, following a steep two-year decline, the manufacturing building category is no longer exerting a downward pull on the nonresidential building total.”
The nonresidential building sector strengthened for the second month in a row, climbing 37 percent with the boost coming from the start of a $6.0 billion ethane cracker plant in Monaca, Pa., in close proximity to the Marcellus shale gas field.
And the increase was aided by two projects in New York City, the $4 billion Delta Airlines new terminal facility at LaGuardia Airport and the $1.7 billion 50 Hudson Yards office tower in Manhattan.
Other projects include the next-largest manufacturing project entered as a September start, which was a $280 million poultry processing plant in Fremont, Neb. The institutional building categories as a group climbed 25 percent in September, led by a 145 percent hike for transportation terminal work.
There were 10 educational facility projects valued at $100 million or more that reached groundbreaking in September, including a $243 million neuroscience building at the University of California, San Francisco, the $200 million renovation of the Mid-Manhattan Library in New York City, and a $150 million high school in Germantown Md.
Healthcare facilities in September retreated 2 percent, although the latest month did include a $550 million medical center in St. Louis, a $183 million hospital in Frisco, Texas, and a $176 million medical center expansion in Vail, Colo. The smaller institutional project types showed a mixed performance in September. The public buildings category climbed 42 percent.
The commercial building categories as a group settled back 4 percent in September, following a 12 percent gain in August.
Hotel construction dropped 45 percent from August, which featured the start of several large projects, including the $342 million hotel portion of the $500 million Resorts World Hotel and Casino in Las Vegas, although September did include groundbreaking for the $95 million Four Seasons Napa Resort in Calistoga, Calif.
Warehouse construction also weakened in September, sliding 14 percent after a strong August.
And office construction advanced 23 percent in September, led by the $1.7 billion 50 Hudson Yards office tower that’s part of the massive Hudson Yards development in New York. Also reaching the construction start stage in September was a $300 million office campus in Burlingame, Calif., and an $80 million office building in Culver City, Calif. In addition, gains were reported in September for store construction, up 12 percent; and commercial garages, up 2 percent.
Residential building in September edged up 1 percent, as both single-family and multifamily housing registered modest gains. Running counter in September was a 3 percent drop for nonbuilding construction, with decreased activity for its public works segment. Through the first nine months of 2017, total construction starts on an unadjusted basis were $557.7 billion, essentially matching the corresponding amount from a year ago. The year-to-date dollar volume for total construction was dampened by a 38 percent decline for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first nine months of 2017 would be up 3 percent compared to the same period last year.
