April Construction Starts Retreat 15 Percent

Nonbuilding Construction and Nonresidential Building Slide After
Sharp Gains in March

NEW YORK–(BUSINESS WIRE)–The value of new construction starts in April fell 15% to a seasonally
adjusted annual rate of $685.2 billion, pulling back following the 16%
hike that was reported in March, according to Dodge
Data & Analytics. Steep declines were registered by two of the
three main construction sectors. Nonbuilding construction, which is
comprised of public works and electric utilities/gas plants, plunged 31%
from its elevated March amount which was lifted by the start of the $4.3
billion Calcasieu Pass liquefied natural gas (LNG) export terminal in
Cameron LA. Nonresidential building fell 18% in April after being
boosted in March by groundbreaking for the $1.6 billion Toyota-Mazda
automotive manufacturing facility in Huntsville AL, among other large
projects. Nonresidential building in April did receive support from the
start of the $1.3 billion new airport terminal project at Kansas City
International Airport. Meanwhile, residential building in April
decreased 1%, as a modest rebound for multifamily housing was outweighed
by further slippage for single family housing. During the first four
months of 2019, total construction starts on an unadjusted basis were
$224.5 billion, down 8% from the same period of 2018. On a twelve-month
moving total basis, total construction starts for the twelve months
ending April 2019 held steady with the corresponding amount for the
twelve months ending April 2018.

April’s data lowered the Dodge Index to 145 (2000=100), down from 171 in
March. Taking the average for March and April produces an Index reading
of 158, which is above the 150 average for January and February, yet
still below the 171 average for all of 2018.

“The construction start statistics can be volatile on a month-to-month
basis, and that’s certainly been true in March and April, as a 16% jump
was followed by a 15% decline,” stated Robert A. Murray, chief economist
for Dodge Data & Analytics. “Much of the volatility can be attributed to
the presence or absence of large projects – in March there were ten
projects valued each at $500 million or more that reached
groundbreaking, while April saw only two such projects. Amidst this
volatility, there are several trends about 2019 construction activity
that are beginning to emerge. Overall construction activity continues to
show deceleration around an up-and-down monthly pattern, with a varied
performance by major construction sector. The public works side of
nonbuilding construction got off to a slow start in 2019, which at least
through March was partially offset by an upturn for electric
utilities/gas plants. Some improvement for public works is expected as
the current year proceeds, given the fiscal 2019 federal funding
approved back in February as well as the continued support of state
construction bond measures. Nonresidential building is staying close to
its pace of last year, helped by continued strength for office
buildings, hotels, educational facilities, and transportation terminals.
The multifamily side of residential building is retreating, even with
the occasional monthly upturn, while single family housing has not yet
provided evidence that it can rebound from the slower pace that took
hold towards the end of last year.”

Nonbuilding construction in April plunged 31% to $147.2 billion
(annual rate), which followed a 40% surge in March. The $4.3 billion LNG
export terminal in Louisiana that was included as a March start caused
much of this volatility – if this project is excluded, the decline for
nonbuilding construction in April would have been a more moderate 9%
following a 7% increase in March. The electric utility/gas plant
category plummeted 87% in April, reflecting both weak activity for the
month and the comparison to March that included the $4.3 billion LNG
export terminal. The public works categories as a group dropped 5% in
April, slowing after a 21% increase in March. The miscellaneous public
works category (which includes site work, rail transit, and pipelines)
fell 29%, although April did include the start of a $307 million rail
transit extension at Hartsfield-Jackson International Airport in Atlanta
GA and a $290 million riverfront revitalization project in Omaha NE.
Declines were also reported in April for water supply construction, down
17%; and river/harbor development, down 40%. On the plus side for public
works, sewer construction in April climbed 88%, led by a $631 million
water pollution control effluent tunnel in Carson CA and a $412 million
sewer project in Redwood City CA. Highway and bridge construction in
April edged up 1%, rising for the second month a row after declines in
January and February. Supporting April’s improved highway and bridge
amount was $253 million for the start of renovation work on the Throgs
Neck Bridge in the Bronx NY. The top five states for highway and bridge
construction starts in April, ranked by dollar volume, were –
California, Texas, Florida, New York, and Ohio.

Nonresidential building in April dropped 18% to $248.5 billion
(annual rate), which followed a 24% increase in March. The manufacturing
plant category fell 72% in April after soaring 90% in March that
included the $1.6 billion Toyota-Mazda automotive manufacturing plant in
Alabama. By contrast, the largest manufacturing plant project that
reached groundbreaking in April was a $250 million paper mill in Green
Bay WI. The institutional side of nonresidential building decreased 9%
in April, which reflected a mixed pattern by project type. The
amusement-related category fell 50% after being boosted in March by the
$850 million renovation of the KeyArena in Seattle WA. Healthcare
facilities fell 29% in April following growth during the previous two
months, while the public buildings category (courthouses and detention
facilities) dropped 22%. On the plus side, the transportation terminal
category soared 159% in April, lifted by the $972 million terminal
building portion of the $1.3 billion new airport terminal project at
Kansas City International Airport. Educational facilities grew 6% in
April, registering improvement for the second month in a row after a
lackluster performance in January and February. Large high school
projects that reached groundbreaking in April were located in Fall River
MA ($215 million), Upper Arlington OH ($140 million), and Santa Monica
CA ($98 million). The top five states for K-12 school construction
starts in April, ranked by dollar volume, were – Texas, Ohio,
California, Washington, and Massachusetts.

The commercial building categories as a group fell 16% in April, after a
22% rise in March. Hotel construction dropped 51% from its March amount,
which featured the start of the $850 million hotel portion of a $1.1
billion hotel and theater redevelopment project located in Times Square
New York City. The largest hotel project that reached groundbreaking in
April was a $229 million Embassy Suites hotel in Nashville TN. Office
construction in April retreated 9% from its March amount, which included
such projects as a $750 million Facebook data center in Sandston VA, the
$550 million Norfolk Southern headquarters building in Atlanta GA, and a
$300 million CloudHQ data center in Ashburn VA. In April, new data
center projects continued at a brisk pace, with six projects valued each
at $100 million or more reaching groundbreaking, led by a $315 million
Facebook data center in New Albany OH. Other noteworthy office projects
in April were a $300 million upgrade to the One Post Office Square Tower
in Boston MA, a $170 million office building in Chicago IL, and two
Charles Schwab office buildings in Westlake TX valued at $84 million and
$81 million respectively. The top five metropolitan areas for office
construction starts in April, ranked by dollar volume, were – Dallas-Ft.
Worth TX, New York NY, Boston MA, Columbus OH, and Portland OR. Store
construction weakened in April, sliding 25%, while warehouse
construction dropped 12%. The commercial garage category was the one
commercial project type that posted an April gain, rising 33% with the
boost coming from the $288 million garage portion of the new airport
terminal project at Kansas City International Airport.

Residential building in April slipped 1% to $289.5 billion
(annual rate), receding for the third month in a row. Single family
housing dropped 4%, and April’s level of activity was down 9% from the
average monthly pace during 2018. By geography, single family housing in
April showed this pattern relative to March – the South Atlantic, down
8%; the Northeast, down 6%; the South Central, down 5%; the West, down
1%; and the Midwest, up 8%. Multifamily housing in April advanced 5%
after a 9% decline in March, but April’s level of activity was still
down 18% from the average monthly pace during 2018. There were ten
multifamily projects valued at $100 million or more that reached
groundbreaking in April, led by the $220 million multifamily portion of
a $300 million mixed-use development on Wilshire Boulevard in Los
Angeles CA and a $200 million apartment building in the Bronx NY. The
top five metropolitan areas ranked by the dollar amount of multifamily
starts in April were – New York NY, Los Angeles CA, Miami FL, Chicago
IL, and Austin TX.

The 8% downturn for total construction starts on an unadjusted basis
during the January-April period of 2019 was the result of lower activity
for each of the three main construction sectors. Nonresidential building
decreased 3% year-to-date, with respective declines of 4% and 37% for
institutional building and manufacturing building, while commercial
building was able to post a 5% gain. Nonbuilding construction dropped
10% year-to-date, as a 21% retreat for public works was partially offset
by a 94% jump for electric utilities/gas plants. Residential building
fell 12% year-to-date, with single family housing down 8% and
multifamily housing down 20%. By major region, total construction starts
for the first four months of 2019 revealed this pattern compared to last
year – the Midwest, down 17%; the South Atlantic, down 11%; the West,
down 9%; the Northeast, down 7%; and the South Central, up 1%.

Useful perspective comes from looking at twelve-month moving totals, in
this case the twelve months ending April 2019 versus the twelve months
ending April 2018. On this basis, total construction starts essentially
maintained the same volume as the previous period. By major sector,
nonresidential building rose 4%, with commercial building up 9%,
manufacturing building up 7%, and institutional building unchanged.
Residential building held steady with the previous period, with single
family housing unchanged and multifamily housing up 1%. Nonbuilding
construction dropped 6%, with electric utilities/gas plants down 1% and
public works down 7%.

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Contacts

Media: Nicole Sullivan | AFFECT Public Relations & Social Media |
+1-212-398-9680, [email protected]