Commercial and multi-family construction up in 2016
February 24, 2017
According to Dodge Data and Analytics, most U.S. metropolitan areas saw significant increases in commercial and multi-family construction project starts last year. This sector includes multi-family housing, office, hotel, warehouse, commercial garage, and store projects.
The 10 metropolitan areas for dollars earned in 2016 were:
New York City at $29.8 billion, down 15 percent from 2015;
Los Angeles at $9.8 billion, up 44 percent;
Chicago at $8.3 billion, up 34 percent;
Washington, D.C., at $8.1 billion, up 35 percent;
Dallas-Fort Worth, at $8 billion, up 16 percent;
Miami, at $7.5 billion, up 14 percent;
Boston at $7.1 billion, up 50 percent;
San Francisco at $5 billion, up 96 percent;
Atlanta at $4.8 billion, up 60 percent;
Seattle at $4.3 billion, down four percent.
Despite New York City’s high performance in terms of dollars earned, its multi-family housing project starts dropped by a significant 28 percent. In fact, were it not for this decline, the nation’s multi-family construction starts would have increased by 13 percent rather than three. As a whole, the United States saw a seven-percent increase in construction starts this year, with increases of 11 percent in commercial building.
“What stands out about 2016 is that growth for commercial and multi-family construction starts becoming broader geographically,” says Robert A. Murray, Dodge Data and Analytics’ chief economist. “Back in 2015, the New York metropolitan area led the upturn by soaring 67 percent, while the next nine markets combined grew eight percent. In 2016, the 15-percent downturn in the New York market was countered by a 33-percent hike for the next nine markets. As a result, the New York share of the U.S. total for commercial and multi-family construction starts settled back from 20 percent in 2015 to 16 percent in 2016, which was still relatively high compared to the 13-percent share during the 2010 to 2014 period.”
The totals for each area were influenced by a variety of factors.
New York City Most likely, the New York metropolitan area’s general decline was encouraged by the expiration of the city’s 421-a program, which—until it ended last January—used tax incentives to encourage developers to provide affordable housing.
In 2016, this area experienced:
38 multi-family project starts worth $100 million or more (most notably, the $453-million multi-family portion of a $475-million Jersey City high-rise);
office construction decreasing two percent from 2015’s 138-percent increase, with the $2-billion 3 Hudson Boulevard as a top project;
hotel construction increasing by 60 percent, partly due to the $205-million Marriott Moxy Hotel in Times Square;
warehouse construction increasing by 55 percent, partly due to a $304-million warehouse in Staten Island and a $200-million warehouse in Cranbury, New Jersey;
commercial garage construction increasing by 27 percent; and
store construction decreasing by 28 percent.
Los Angeles Moving from the third-largest market in commercial and multi-family construction to the second-largest, Los Angeles experienced a 36-percent increase in commercial building and a 50-percent increase in multi-family housing in 2016.
This year, the area also experienced the following shifts:
14 multi-family projects worth $100 million or more were started (most notably, the $493-million portion of the $600-million Century Plaza mixed-use complex);
office construction increased by 67 percent (due partly to the $178-million office portion of the $398-million Broadcom Research and Development Campus);
hotel construction increased by 77 percent (due partly to the $93-million hotel portion of a $135-million hotel and condominiums in West Hollywood);
warehouse construction increased by nine percent;
commercial garage construction increased by 42 percent; and
store construction increased by seven percent (due partly to the Beverly Center’s $500-million renovation).
Chicago Chicago jumped from 2015’s fifth-largest market for these construction categories to third-largest last year, maintaining last year’s performance in commercial construction and seeing an 82-percent increase in multi-family housing.