Posted December 21, 2021

Dodge: Total Construction Falls Sharply In November

Absence of large projects pushes nonresidential starts lower; underlying trend remains positive.

Total construction starts fell 14% in November to a seasonally adjusted annual rate of $867.8 billion, according to Dodge Construction Network. Nonbuilding and nonresidential building starts bore the brunt of the decline, falling 30% and 21% respectively after seeing sharp increases in October as three large projects broke ground. Residential starts gained a modest 3%. Without October’s large projects, total construction starts in November would have increased by 5%.

“Large projects aside, the underlying trend continues to point to a modest recovery in construction starts,” stated Richard Branch, chief economist for Dodge Construction Network. “However, even as projects continue to move forward, the short-term outlook remains cloudy due to continued escalation in material prices and labor shortages. While construction should see some reprieve in 2022, these challenges will restrain the industry’s ability to fully capitalize on both the large number of projects in planning and funding resulting from the infrastructure package. The result will be moderate growth in construction starts over the near-term.”

Below is the breakdown for construction starts:

Nonbuilding construction starts dropped 30% in November to a seasonally adjusted annual rate of $188.1 billion. This decline in activity followed a strong October, which included the groundbreaking of an $8.5 billion LNG export facility. With that project removed from the data, November starts would have increased 13%.

November’s miscellaneous nonbuilding category jumped 70%, and highway and bridge starts gained 11%. However, environmental public starts lost 14%, and starts of utilities/gas plants fell 69%.

Year-to-date, total nonbuilding starts were 1% higher than a year earlier through November. Environmental public works were 19% higher, and utility/gas plant starts were up 15%. Highway and bridge starts were 7% lower and miscellaneous nonbuilding fell 15% during the first 11 months of the year.

The largest nonbuilding projects to break ground in November were the $1.6 billion Vineyard Wind, an 1,800 MW offshore wind project in Barnstable, MA, the $337 million portion of the Foothill Gold Line light rail project in Glendora, CA, and the $325 million Sonoran Solar project in Buckeye, AZ.

Nonresidential building starts lost 21% in November, falling to a seasonally adjusted annual rate of $281.1 billion. This decline is due to the start of two large manufacturing projects beginning in the previous month. Without these two projects in the data, nonresidential building projects would have increased 5% in November.

In November, commercial building starts fell 10%, with only parking structures and warehouses showing small gains. Manufacturing fell by a sharp 96%.

Institutional starts, by contrast, gained 28%, with all categories rising. In the first 11 months of 2021, nonresidential building starts were 11% higher. Commercial starts increased 7%, manufacturing starts were 86% higher, and institutional starts were up 5%.

The largest nonresidential building projects to break ground in November were the $2.6 billion first phase of the Terminal 1 replacement at San Diego International Airport in San Diego, CA, the $840 million Robley Rex VA Medical Center Campus in Louisville, KY, and the $419 million expansion of the Wisconsin Convention Center in Milwaukee, WI.

Residential building starts rose 3% in November to a seasonally adjusted annual rate of $398.6 billion. Multifamily starts moved 16% higher, while single family starts slipped 2%. Through the first 11 months of 2021, residential starts were up 20% over the same period one year ago. Single family starts gained 20%, and multifamily start rose 23%.

The largest multifamily structures to break ground in November were the $300 million first phase of the High St. Atlanta mixed-use projects in Dunwoody, GA, the $237 million North Loop Green 3 Project in Minneapolis, MN, and the $200 million 60 Kilmarnock St. residential building in Boston, MA.

Regionally, total construction starts improved in the Northeast and Midwest regions but fell in the South Atlantic, South Central, and West regions.

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