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03-19-20 | Economic News

Total Construction Starts Are Up Year-Over-Year

And Nonresidential Building Showed 7% Gain for the Month

The largest nonresidential building projects to break ground in February were the $1.3 billion Two Manhattan West Office Building in New York City, the $800 million New Valley Hospital in Paramus, New Jersey, and the $760 million Disney/ABC Headquarters complex, also in the Big Apple.

Dodge Data & Analytics, a leading provider of analytics and software-based workflow integration solutions for the construction industry, recently reported that for the twelve months ending February 2020, total construction starts were 3% higher than the previous twelve-month period. By major category, nonresidential building starts were also 3% higher, while residential starts were up 1%, with nonbuilding starts increasing 7%.

But in February, the Dodge Index moved lower to 162 compared to the 165 posted in January.

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"The good news is that heading into the coronavirus pandemic, construction starts were stable. The economy was healthy fueled by continued steady job growth," stated Richard Branch, chief economist of Dodge Data and Analytics. "Of course, the pandemic's effect on future starts is as yet unknown. Construction firms will need to deal with multiple issues including supply chain disruptions, workforce constrictions due to the outbreak, and an economy that has moved from a pace near its long-term potential to a virtual stall within the space of a week. Over the next few months, many construction projects could see delays in start or longer times to completion based on shortages of supplies from China or a reduction in available labor due to spread of the virus. Still, others may begin to see projects cancelled outright due to a sudden circumstantial change in demand. Planning data as reported to Dodge Data & Analytics will be watched closely to see if fissures are developing in the construction sector."

For the twelve months ending February 2020, total nonbuilding starts were 7% higher than the twelve months ending February 2019. Starts in the utility/gas plant category were up 92% and environmental public works starts increased 3%. However, street and bridge starts were 8% lower and miscellaneous nonbuilding was off 14% for the twelve months ending in February.

And for the month, nonbuilding construction starts moved 9% lower from January to February - the result of a 17% decline in the highway and bridges category and a 22% drop in the utility/gas plant category. However, gains were seen in the miscellaneous nonbuilding category and environmental public works, which rose 14% and 1% respectively.

Nonresidential building starts were 3% higher in the most recent twelve months than during the twelve months ending in February 2019. Commercial starts were up 7% in that time, while institutional starts were less than 1% lower. Manufacturing starts were down 2%.

Nonresidential building gained 7% in the month of February on the back of several large projects getting underway in the office and healthcare sectors. February's commercial construction starts rose 7%, while institutional starts moved 13% higher. Manufacturing starts by contrast fell 27% in response to several large projects that broke ground in January.

For the twelve months ending in February of this year, total residential starts were 1% higher than in the twelve months ending in February 2019. Single family starts were up 3%, while multifamily building starts were 2% lower.

For the month, residential building starts moved 4% lower. The largest multifamily structures to break ground during in February were the $150 million Cambridge Crossing in Cambridge, Mass., the $150 million 44 East Condo Tower in Austin, Texas, and the $140 million Armature Works mixed-use project in Washington D.C.

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