Dodge Data & Analytics reports commercial and multifamily construction starts in 2017 settled back from 2016 figures in many of the top U.S. metro areas today. The Dodge report shows a fairly balanced level of activity - moderate declines following elevated 2016 activity - for commercial and multifamily construction starts nationwide, with 2017 totals of $194.7 billion down 6 percent from 2016 but still 8 percent above 2015.
From 2016 to 2017, the most growth year-to-year was seen in:
- San Francisco +29%
- Atlanta +24%
- Philadelphia +31%
- Orlando +24%
Downturns were reported in:
- Miami -20%
- Chicago -26%
- Boston -26%
- Denver -25%
"Of the commercial and multifamily project types, multifamily housing is the one that appears to have already reached its peak and is now heading downward, as shown by the 12% decline in dollar terms during 2017," stated Robert A. Murray, chief economist for Dodge Data & Analytics.
"The expansion for multifamily housing began back in 2010, and in 2015 it benefitted from a surge of activity in the New York NY metropolitan area and then in 2016 it showed broader growth geographically due to strong gains by other major metropolitan areas. That pattern shifted in 2017, as markets such as Los Angeles CA, Dallas-Ft. Worth TX, and Washington DC retreated from the levels posted during 2016. Multifamily vacancy rates, while still low historically, have been edging up slightly on a year-over-year basis for almost two years. In addition, the banking sector has taken a more cautious stance towards lending for multifamily projects. In the most recent survey of bank lending officers by the Federal Reserve. 16% of the respondents indicated that they had tightened standards for multifamily loans during the fourth quarter of 2017, compared to just 1% of the respondents that reported tightening for nonresidential building project loans. At the same time, the downturn for multifamily housing at the national level is expected to stay moderate for the near term, as the latecomers to the multifamily expansion, particularly in the smaller markets, continue to see growth."
"The picture for commercial building is mixed, as both office buildings and warehouses seem to still be in the process of reaching a peak," Murray continued. "Although downtown and suburban office vacancy rates edged up slightly in the fourth quarter of 2017, they remain low by recent standards, and warehouse vacancy rates have not yet begun to rise in a sustained manner. At the same time, the lodging sector is seeing slower growth for revenue per available room compared to a few years ago, and hotel construction starts are easing back, particularly from 2016 which saw several very large hotel and casino projects reach the construction start stage. As for store construction, its 10% retreat in dollar terms at the national level during 2017 is consistent with its weak performance in the overall expansion for commercial building to date."
To review the complete Dodge Data report, click here: