At a seasonally adjusted annual rate of $711.6 billion, new construction starts in August slipped 2 percent from July, according to Dodge Data & Analytics. The decline followed July’s 6 percent increase, yet still kept total construction activity 5 percent above the relatively subdued pace reported during the second quarter.
The nonbuilding construction sector in August dropped 24 percent after soaring 26 percent in July, reflecting decreased activity for public works and power plants, even with the August start of a $1.3 billion natural gas-fired power plant in California.
Highway and bridge construction advanced 23 percent.
Residential building in August eased back 1 percent, due to weaker activity for multifamily housing. Nonresidential building was the growth sector in August, climbing 14 percent with the start of two massive projects in New York – the $1.6 billion Moynihan Station project and the $1.2 billion Javits Convention Center expansion.
“What stands out about the August statistics is the strength shown by the institutional side of nonresidential building, which is consistent with a broader trend that’s taken hold during 2017,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “The institutional building segment (which includes such project types as transportation terminals, convention centers and educational facilities), is providing much of the lift this year to nonresidential building, while the commercial building segment has decelerated after a 20 percent surge in 2016. It’s believed that total construction starts for the U.S. should be able to register growth for 2017 as a whole, helped by this year’s strength for institutional building, notwithstanding the near term disruption to construction activity caused by Hurricane Harvey in the Houston area and Hurricane Irma in Florida.”
Nonresidential Building
Nonresidential building in August was $268.3 billion (annual rate), a 14 percent gain that followed a 5 percent decline in July. The institutional building categories as a group soared 27 percent, led by a 174 percent hike by the transportation terminal category.
Most of the upward push came from the $1.25 billion rail terminal segment of the $1.6 billion Moynihan Station project in New York, which also includes $300 million for office space and $50 million for retail space. This project involves the redevelopment of the James A. Farley Post Office Building into a new train hall with additional office and retail space, expanding the existing Penn Station in Manhattan.
Other transportation terminal projects in August included the $229 million Federal Inspection Services facility at San Diego International Airport and $90 million for airport security infrastructure at San Francisco International Airport.
The amusement and recreational category also climbed sharply in August, advancing 144 percent with the lift coming from the $1.2 billion expansion to the Jacob K. Javits Convention Center in New York. In addition, the educational facilities category increased 39 percent in August, following lackluster activity during the previous three months.
Large educational facilities projects that reached groundbreaking in August included a $200 million biology research building at Yale University in New Haven, Conn., and the $153 million Medicine and Heart Health Institute building at the University of South Florida in Tampa.
There were five K-12 school buildings valued at $50 million or more entered as August starts, located in Brooklyn, N.Y. ($93 million and $74 million), Columbia City Ind. ($65 million), the Bronx, N.Y. ($51 million), and Dallas ($50 million).
On the negative side, healthcare facilities dropped 41 percent in August after jumping 117 percent in July which featured the start of the $1.5 billion Penn Medicine Patient Pavilion in Philadelphia. August declines were also reported for public buildings (courthouses and detention facilities), down 12 percent; and religious buildings, down 22 percent.
The commercial categories as a group increased 11 percent in August, bouncing back after a 20 percent decline in July. The office building category registered a 38 percent gain in August, aided by the start of these large projects – a $523 million office campus in Redwood City, Calif., the $322 million Moffett Towers II office park in Sunnyvale, Calif., the $300 million office portion of the Moynihan Station project in New York and the $145 million NCR headquarters second office building in Atlanta.
Hotel construction in August was also up sharply, rising 78 percent after a weak July with the help of these projects – the $342 million hotel portion of the $500 million Resorts World Hotel and Casino (phase 1) in Las Vegas, the $224 million Oregon Convention Center Hotel in Portland, Ore., the $200 million Seminole Hard Rock Tampa hotel tower in Tampa and the $141 million hotel portion of the $226 million Sycuan Hotel and Casino expansion (phase 1) in El Cajon, Calif.
Residential Building
Residential building, at $293.4 billion (annual rate), settled back 1 percent in August. Multifamily housing retreated 12 percent following its 34 percent July increase, resuming the moderate downward trend that’s taken hold in 2017 after elevated activity during 2016.
There were six multifamily projects valued at $100 million or more that reached groundbreaking in August, compared to nine such projects in July. The large multifamily projects in August were led by five projects in the New York metropolitan area, with two in Brooklyn ($261 million and $175 million), two in Manhattan ($225 million and $150 million) and one in Sayreville, N.J. ($137 million).
Single- family housing in August rose 4 percent, showing modest improvement after losing some momentum during the previous four months. By major region, single family housing performed as follows in August – the West, up 9 percent; the Midwest, up 6 percent; the South Atlantic, up 3 percent; the South Central, up 2 percent; and the Northeast, unchanged from July.
Nonbuilding Construction
Nonbuilding construction in August was $149.8 billion (annual rate), down 24 percent. The previous month had jumped 26 percent, reflecting a 64 percent surge by the electric utility/gas plant category, which included the July start of two massive gas-fired power plants, located in California ($2.2 billion) and New York ($1.6 billion).
The public works segment of nonbuilding construction, up 11 percent in July, had been lifted by the start of such projects as the $1.5 billion Brownsville to Nueces natural gas pipeline in Texas and the $844 million Vista Ridge water supply pipeline project in San Antonio. In August, the electric utility/gas plant category fell 58 percent, returning to a level similar to what was reported during the first six months of 2017.
While August included the start of the $1.3 billion AES Alamitos Energy Modernization of a natural gas-fired power plant in Long Beach, Calif., the next largest power plant project was the $350 million Santa Rita Wind Farm in Big Lake, Texas.
The public works categories as a group dropped 5 percent in August, with weaker activity for river/harbor development, down 35 percent; miscellaneous public works (including pipelines), down 39 percent; and water supply construction, down 56 percent. Running counter was a 78 percent increase for sewer construction, which included a $178 million bio solids treatment facility in Dallas and a $177 million waste water treatment plant in Queens, N.Y., as August starts.
Also showing growth in August was highway and bridge construction, which advanced 23 percent as the result of such large projects as a $475 million bridge replacement in Birmingham, Ala., and a $460 million high-occupancy toll lanes project in Alexandria, Va. Through the first eight months of 2017, the top five states in terms of the dollar amount of highway and bridge construction starts were – Texas, California, Florida, Pennsylvania and New York. Virginia ranked number 10 in the first eight months of 2017, while Alabama ranked number 12.