Slight Gain in Nonresidential Building Overwhelmed by Pullback in Residential and Nonbuilding Starts.
By Mark S. Kuhar
New construction starts moved 5% lower in September to a seasonally adjusted annual rate of $774.1 billion, according to Dodge Data & Analytics. This marks the second consecutive monthly decline in construction starts.
By major sector, nonbuilding construction fell 13% in September, while residential construction dropped 6%. On the plus side, nonresidential construction starts rose 1% during the month aided by the start of a large manufacturing project.
Highways and bridges were down 7%.
The September statistics pushed the Dodge Index lower to 164 (2000=100) compared to 173 in August, marking the lowest reading for the Index since May. Despite the month’s decline, the Index remains close to its 2019 average of 167.
Through the first nine months of 2019, total construction starts were 3% lower than 2018 due to pullbacks in both residential and nonresidential construction starts. However, nonbuilding construction starts are 4% higher year-to-date as a result of strong gains in electric utilities/gas plants.
“Large projects continue to make their presence felt in the monthly statistics, sometimes obscuring underlying trends,” stated Richard Branch, chief economist for Dodge Data & Analytics. “Nevertheless, construction starts have certainly throttled back in 2019 due to mounting uncertainty over the country’s economic health.”
Nonbuilding construction totaled $187.0 billion (at a seasonally adjusted annual rate) in September, a 13% drop from the previous month. Construction starts in the miscellaneous nonbuilding category declined 32% from August to September, while highway and bridge starts fell 12%, and electric utility/gas plant starts lost 10% over the month. On the plus side, environmental public works starts (drinking water, sewers, hazardous waste, and other water resource projects) increased 12% in September.
The largest nonbuilding construction project to get underway in September was the $994 million Cotton Belt “Silver Line” Rail Corridor, a 26-mile rail line extending from Dallas-Fort Worth Airport in Dallas to Shiloh Road in Plano, Texas. Also starting in September was the $720 million (480 MW) Maverick Creek Wind Farm near Eden, Texas, and a $629 million reconstruction of a 5.5-mile stretch of I-75 in Troy, Mich.
Through the first nine months of 2019, nonbuilding construction was 4% higher than in the same period of 2018 at $151.3 billion. Starts for electric utilities/gas plants were 132% higher year-to-date and environmental public works were up 2%. Miscellaneous nonbuilding starts, however, were 24% lower through nine months and highways and bridges declined 7%.
Nonresidential building starts inched 1% higher in September to $287 billion (at a seasonally adjusted annual rate). The increase was a result of a 243% increase in manufacturing construction due to the start of a large automotive plant. Commercial construction starts fell 14% over the month as the office sector pulled back from a very strong level of activity during the prior month. Institutional construction starts fell 1%.
The largest nonresidential building project to break ground in September was a $969 million consolidated rental car facility at Los Angeles International Airport. Also getting under way was the $900 million Fiat Chrysler Assembly complex in Detroit and the $750 million Exxon Polypropylene Production plant in Baton Rouge, La.
Year-to-date through September, nonresidential building starts totaled $215.0 billion, a 4% decline from the first nine months of 2018. Commercial starts were 6% higher pushed forward by the office, warehouse, and parking categories. Institutional construction starts were down 3% through nine months, with all major categories posting setbacks. Manufacturing starts were a sharp 39% lower year-to-date.
Residential building fell 6% in September to $300.0 billion at a seasonally adjusted annual rate. Both single-family and multifamily starts fell 6% from August to September. The largest multifamily construction project to get underway in September was the $228 million Lakeshore East – Cirrus Apartment Tower in Chicago. Also breaking ground during the month was the $192 million Greenpoint Landing in Brooklyn, N.Y., and the $150 million The Eleven Condo project in Minneapolis.
Through the first nine months of the year, residential construction starts were 6% lower than in the same period of 2018 at $238.3 billion. Single-family starts were down 4%, while multifamily declined 11% year-to-date.
|Monthly Construction Starts (Seasonally Adjusted Annual Rates, In Millions of Dollars)||Sept. 2019||Aug. 2019||% Change|
|Source: U.S. Dept. of Commerce|
|Year-to-Date Construction Starts (Seasonally Adjusted Annual Rates, In Millions of Dollars)||9 Mos. 2019||9 Mos. 2018||% Change|
|Source: U.S. Dept. of Commerce|
Voters Approve Nearly 90% of Transportation Ballot Measures
Voters in 19 states sent a decisive message of support for transportation investment on Nov. 5, approving almost 90% of 305 state and local transportation ballot measures.
In total, the 270 approved initiatives are expected to generate over $9.6 billion in one-time and recurring revenue, according to the analysis conducted by the American Road & Transportation Builders Association’s Transportation Investment Advocacy Center (ARTBA-TIAC). Two measures in Texas are still pending.
“The ballot results are a great reminder infrastructure investment remains one of the few areas where red states, blue states, Republicans and Democrats can all come together,” ARTBA President Dave Bauer said. “It should also demonstrate to lawmakers on Capitol Hill that the public will be on board for the passage of a long-term bill that significantly boosts highway and transit investment at the federal level.”
The preliminary results reaffirm a decade-long trend of voters strongly supporting investments to maintain and improve their state or local transportation networks. Voters have approved 81% of nearly 2,000 transportation investment ballot measures tracked by ARTBA-TIAC since 2010, including this year’s results.
“Public support for increasing infrastructure investment continues to help local governments and the transportation construction community improve safety, mobility and overall quality of life for residents as projects get underway,” said Carolyn Kramer, ARTBA-TIAC director.
Voters in Maine overwhelmingly approved, by a 76% to 24% margin, a $105 million bond measure to support transportation infrastructure projects. The vote was Maine’s seventh successful transportation bond in eight years.
While transportation investment fared well nationwide, Washington state voters endorsed by a 56% to 44% margin a measure that reduces or repeals certain motor vehicle taxes and fees and removes the authority to impose certain new fees without their approval. This decision will cost the state nearly $4.3 billion in state and local transportation revenue over the next six years.
Voters in Colorado rejected by a 55% to 45% vote a measure that would have permitted the state to retain excess tax collections in order to fund education and transportation.
The 305 measures tracked by ARTBA-TIAC is the largest number ever for an odd-numbered, off-year election. Although historically most transportation measures are put on the ballot in even-numbered years when congressional or presidential elections drive higher turnout, an increasing number of measures are being considered by voters during odd-numbered years and primary elections.
There were 57 measures in 12 states that would raise over $20 million each, compared to 21 measures in 2017. Of that total, 89% were approved. Of 25 measures that would raise over $100 million, voters approved 92%. This included a bond measure in Harris County, Texas, to support transit expansions in Houston under the “Moving Forward Plan.”
Of the local ballot measures, most (302 of 305) were property tax increases, primarily in Ohio (154) and Michigan (15), where many municipalities consistently ask voters to renew such assessments to pay for local roads and infrastructure repairs.
Additionally, local bond measures in Texas appeared on 25 ballots and received 96% approval, which will generate nearly $6 billion. Most of these measures established municipal utility districts.
The approved measures will support $7.7 billion in new transportation investment revenue and $1.9 billion in continued funding through tax extensions, renewals or protections. The timing of the market impact of these actions is difficult to project as revenue approved will last up to 25 years.