New Construction Starts in July Hold Steady
NEW YORK, NY At a seasonally adjusted annual rate of $629.4 billion, new construction starts in July were essentially unchanged from June's pace, according to Dodge Data & Analytics. By major sector, nonresidential building showed slight improvement following its lackluster June performance, while non-building construction in July continued to slide back from the exceptional activity witnessed earlier in the year that reflected the start of very large projects, including several massive liquefied natural gas terminals.
Through the first seven months of 2015, total construction starts on an unadjusted basis were $397 billion, up 19 percent from the same period a year ago. Leaving out the volatile electric utility and gas plant category, total construction starts during the first seven months of 2015 are up a more moderate 10 percent.
The latest month's data kept the Dodge Index at 133, the same as June's upwardly revised reading. While June and July were at the low end of what's been reported so far in 2015, with the Dodge Index ranging from 133 to 156, they were still above the 125 average for 2014 as a whole.
"The first half of 2015 showed wide swings in the pattern of total construction starts, affected by the presence or absence of unusually large projects," said Robert A. Murray, Chief Economist for Dodge Data & Analytics. "Amidst these top-line swings, the underlying trend of activity has been generally upward relative to last year.
Nonresidential building in July increased 2 percent to $194 billion. The commercial categories as a whole bounced back 12 percent in July, after retreating by the same percentage amount in June. Office construction climbed 7 percent in July, reflecting groundbreaking for several noteworthy projects. These included the $232 million Bridgestone Americas office tower in Nashville, Tennessee, the $150 million Seaport Tower in Boston, Massachusetts, a $100 million data center in Lowell, Massachusetts, and a $100 million portion of the Toyota Corporate Campus in Plano, Texas.
Store construction in July improved 6 percent, helped by the start of the $40 million Wade Park Shopping Center in Frisco, Texas.
Warehouse construction in July rebounded 28 percent after a weak June, and included groundbreaking for a $48 million Home Goods distribution center in Tucson, Arizona.
Hotel construction, which has been the one commercial property type to register healthy year-to-date percentage growth, slipped 4 percent in July. The latest month still included the start of several large hotel projects, such as the $79 million phase 2 of the Kalahari Resort and Water Park in Pocono Manor, Pennsylvania, the $76 million renovation to the Atlanta Marriott Marquis Hotel in Atlanta, Georgia, and the $75 million hotel portion of the $175 million Hilton Statler Hotel and Residences in Dallas, Texas.
New manufacturing plant construction starts were generally subdued in July, falling 39 percent from June, and substantially lower than the elevated amounts back in February and April that featured the start of several huge petrochemical plants.
Healthcare facilities in July fell 15 percent; maintaining the up-and-down pattern that's been present in 2015, even with the July start of a $250 million hospital tower in Provo, Utah. The smaller institutional categories all registered gains in July. Transportation-related buildings jumped 120 percent, helped by the start of a $200 million rail service facility in Croton On Hudson, New York.
The amusement and recreational building category climbed 49 percent, helped by the start of a $130 million student center at the University of Kentucky in Lexington, Kentucky, and a $123 million music hall renovation in Cincinnati, Ohio. Both the public buildings category and churches rebounded from very weak activity in June, posting respective gains of 58 percent and 32 percent. The public buildings category was supported by the July start of a $275 million detention center in Indio, California.
Nonbuilding construction in July dropped 9 percent to $146.9 billion. The decline came as the result of diminished activity for most of the public works categories, which fell 13 percent as a group. Highway and bridge construction retreated 19 percent in July, making it three out of the past four months that weaker activity has been reported, which follows the surprisingly strong pace in early 2015.
"The uncertainty arising from the expiring extension of the surface transportation legislation on July 31, along with the depleted Highway Trust Fund, likely played some role in July's pullback for highway and bridge construction," Murray said.
The environmental public works categories in July all reported a diminished volume of construction starts, as follows - river/harbor development, down 20 percent; water supply construction, down 23 percent; and sewer construction, down 27 percent. The "miscellaneous public works" category - which includes such diverse project types as site work, pipelines, and mass transit - ran counter in July with a 29 percent gain. Large miscellaneous public works projects that reached the construction start stage in July included the $700 million expansion of the Creole Trail natural gas pipeline in Louisiana, a $495 million oil pipeline replacement in Illinois and Indiana, and a $195 million Northeast Rail Corridor project in Connecticut.