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New Construction Starts Decline 10 Percent


Highway and Bridge Construction in December Climbed 19 Percent; Up 5 Percent for Year.

New construction starts in December fell 10 percent to a seasonally adjusted annual rate of $708.9 billion, continuing to retreat after November’s 7 percent slide, according to Dodge Data & Analytics.

The December downturn reflected diminished activity for each of the three main construction sectors.

  • Nonresidential building dropped 14 percent, as its commercial building segment lost momentum following its heightened November amount.
  • Residential building pulled back 8 percent, due to reduced activity in December for both single family and multifamily housing.
  • Nonbuilding construction decreased 9 percent, with a steep plunge by the electric utility/gas plant category that outweighed a December rebound for public works.

Highway and bridge construction in December climbed 19 percent.

Nonresidential building in December was $242.8 billion (annual rate), down 14 percent from the previous month. The commercial building categories as a group fell 27 percent after registering a 15 percent increase in November that featured the start of the $1.5 billion Manchester Pacific Gateway mixed-use complex in San Diego with hotel, office, retail, museum and garage space.

Office construction in December dropped 34 percent, following its November amount that included the start of a $750 million Facebook data center in Covington, Ga., the $544 million office portion of the Manchester Pacific Gateway complex, and a $530 million California state government office building in Sacramento, Calif.

The largest office projects that were entered as December construction starts were $400 million for three Microsoft data center buildings in San Antonio, a $222 million data center in Ashburn, Va., and a $135 million California state government office building in Rancho Cordova, Calif.

Hotel construction experienced an even larger percentage decline in December, plunging 41 percent, after being lifted in November by the $643 million hotel portion of the Manchester Pacific Gateway complex and the $241 million Omni Hotel in Oklahoma City. The largest hotel projects that were entered as December construction starts were the $168 million Joseph Nashville Hotel in Nashville and the $83 million hotel portion of a $170 million hotel/multifamily mixed-use building in Austin, Texas.

Decreased activity in December was also reported for commercial garages, down 30 percent; and warehouses, down 24 percent; although the warehouse category did include the start of a $136 million warehouse complex in Lacey, Wash., and a $130 million warehouse complex in Nampa, Idaho.

Store construction was the one commercial project type that registered a December gain, rising 32 percent with the help of the $52 million Edens Collection shopping mall in Chicago. The manufacturing plant category slipped 2 percent in December, with the largest project entered as a construction start being a $117 million bioenergy plant in Rialto, Calif.

The institutional building categories as a group edged up 1 percent in December, after sliding 22 percent in November. Educational facilities provided much of the lift in December, climbing 27 percent with the help of these projects – the $650 million renovation of the Smithsonian National Air & Space Museum in Washington, D.C., a $118 million high school in Queens, N.Y., and a $101 million high school in Waukee, Iowa.

The public buildings category also registered growth in December, advancing 48 percent as a $155 million courthouse reached groundbreaking in Redding, Calif. In addition, December gains were reported for church construction, up 18 percent; and transportation terminals, up 1 percent. Reduced activity was reported in December for amusement-related work, down 42 percent; and healthcare facilities, down 16 percent; although the latter did include the start of the $175 million Penn Medicine ambulatory care facility in Wayne, Pa.

Residential building in December was $300.6 billion (annual rate), down 8 percent from the previous month. Multifamily housing retreated 15 percent, slipping for the second month in a row after a 19 percent gain in October.

There were four multifamily projects valued at $100 million or more that reached groundbreaking in December, compared to 10 such projects in November. The large multifamily projects in December were led by a $265 million apartment building in Oakland and a $150 million apartment building in Long Beach, Calif.

Single-family housing in December dropped 5 percent, settling back from the extended plateau that was present for much of 2018. The December pace for single-family housing was down 7 percent from the average dollar volume for the previous 11 months.

Nonbuilding construction in December was $165.5 billion (annual rate), down 9 percent from the previous month. The electric utility/gas plant category plunged 74 percent from its improved amount of construction starts in November, which included a $3.0 billion liquefied natural gas export terminal in the Corpus Christi, Texas area.

The largest electric utility/gas plant projects entered as December construction starts were a $500 million solar power plant in Georgia, a $303 million wind power plant in Oregon, and a $300 million wind farm in South Dakota.

In contrast, the public works categories in December rebounded 26 percent after sliding 29 percent in November. Highway and bridge construction in December climbed 19 percent, helped by the start of the $360 million I-40 improvement project in the Raleigh, N.C., area.

The miscellaneous public works category (which includes site work, pipelines, and mass-transit projects) surged 80 percent in December, boosted by the $500 million Dominion natural gas pipeline in West Virginia and Pennsylvania. The environmental public works categories posted gains in December, with sewer construction, up 26 percent; river/harbor development, up 8 percent; and water supply construction, up 4 percent.

 Monthly Construction Starts (Seasonally Adjusted Annual Rates, In Millions of Dollars) Dec. 2018

Nov. 2018

% Change
Nonresidential Building $242,847 $281,088 -14
Residential Building $300,553 $326,104 -8
Nonbuilding Construction $165,475 $181,634 -9
TOTAL Construction $708,875 $788,836 -10
Source: U.S. Dept. of Commerce

Construction Starts Flat for Full-Year 2018