First Half 2017 Commercial and Multifamily Construction Starts Reveal Mixed Pattern Across Top Metro AreasAugust 4th, 2017 | Category: Industry News
During the first half of 2017, eight of the top ten metropolitan markets for commercial and multifamily construction starts ranked by dollar volume registered decreased activity compared to a year ago, according to Dodge Data & Analytics. At the same time, metropolitan markets ranked 11 through 20 showed growth for nine of the ten markets, as smaller geographic areas are picking up the slack from the deceleration underway in those cities that have led the commercial and multifamily upturn over the past several years. At the national level, the volume of commercial and multifamily construction starts during the first half of 2017 was $87.5 billion, down 9 percent from last year’s first half, although still a slight 1 percent above what was reported during the first half of 2015.
The New York metropolitan area, at $10.5 billion in the first half of 2017, maintained its number-one ranking and comprised 12 percent of the U.S. commercial and multifamily total, but was down 22 percent from a year ago, according to the report. The New York metropolitan area reached a peak back in 2015, when $35.3 billion in commercial and multifamily construction starts were reported for the full year, comprising 17 percent of the national total. In 2016, New York dropped 16 percent for the full year, and now is on track for another decline in 2017. Other metropolitan areas in the top ten with double-digit declines in the first half of 2017 were Los Angeles ($4.4 billion), down 15 percent; Dallas-Ft. Worth ($3.2 billion), down 29 percent; Boston ($2.4 billion), down 27 percent; and Seattle ($1.9 billion), down 23 percent.
Miami ($3.6 billion) dropped a moderate 5 percent during the first half of 2017, and the two markets in the top ten with only slight declines were Chicago ($3.8 billion) and Washington, D.C. ($3.6 billion), each down 1 percent. The two metropolitan areas in the top ten that showed growth during the first half of 2017 were San Francisco ($4.5 billion), up 48 percent; and Atlanta ($3.4 billion), up 19 percent. San Francisco was lifted by the start of the $1.3 billion Oceanwide Center Tower, while Atlanta benefited from the start of the $240 million Coda Building in Georgia Tech’s Technology Square.
The commercial and multifamily total comprises office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing. At the U.S. level, the 9-percent decline for the commercial and multifamily total during the first half of 2017 was due entirely to a slower pace for multifamily housing, which dropped 18 percent, while commercial building held steady with its first half 2016 amount, according to the report.
“Multifamily housing served as the leading edge of the current construction expansion, and increasingly it looks like it reached its peak in 2016,” says Robert A. Murray, chief economist for Dodge Data & Analytics.
Murray adds, “Although it’s true that lenders are exercising greater caution towards multifamily projects, more construction is taking place in those markets which have been relative latecomers to the expansion, and this is helping to limit the extent of the multifamily slowdown now underway at the national level.”