On the whole, commercial construction is ahead of the pace set at this time last year. But according to recent research by Dodge Data & Analytics, construction starts last month faltered significantly.
At a seasonally adjusted annual rate of $789.3 billion, November new construction starts in the U.S. decreased 7 percent from October’s elevated amount. Most of the total construction decline in the latest month was the result of nonresidential building pulling back 15 percent after its 43 percent surge in October.
“Amidst the monthly ups-and-downs, the construction start statistics show that, on balance, the construction industry expansion was still underway in 2018, although the rate of growth has slowed considerably from the 7 percent gains for total construction reported during 2016 and 2017,” said Robert A. Murray, chief economist for Dodge Data & Analytics.
In the metropolitan statistical area of Chicago-Naperville-Joliet—which consists of Cook, DeKalb, DuPage, Grundy, Jasper, Kane, Kendall, Kenosha, Lake, McHenry, Newton, Porter and Will Counties in Indiana, Wisconsin and Illinois—commercial construction starts declined significantly year-over-year.
In November 2017, nonresidential construction starts in the Chicago MSA equaled $440.9 million in value, compared to only $256.9 million for November 2018, a 42 percent drop. However, this year is shaping up better than last cumulatively; the $6.5 billion of construction starts through last month were a 10 percent rise over the cumulative $5.9 billion at this time last year.
Dodge Data & Analytics defines nonresidential buildings as office, retail, hotels, warehouses, manufacturing, educational, healthcare, religious, government, recreational and other buildings. It excludes single-family and multifamily housing.
Around the country, there were eight very large projects with a value of $500 million or more (totaling $7.4 billion) that boosted nonresidential building in October. In contrast, November witnessed only three comparable projects, totaling $2.8 billion.
“The commercial building segment revealed more growth in dollar terms for hotels and office buildings,” Murray said, “with the latter boosted by the start of such projects as the $1.8 billion Spiral office tower in New York, a $665 million office tower on North Wacker Drive in Chicago, as well as several massive data center projects.”
Murray is referencing 110 N. Wacker Drive, a spec office building going up on the former GGP site, developed by Howard Hughes Corp. and Riverside Investment & Development. Clark Construction began construction last month on the 53-story riverfront tower, designed by Goettsch Partners. The project is scheduled for completion in late 2020.
