Construction Starts in September Climb 10 Percent

NEW YORK, Oct. 20, 2014 /PRNewswire/ -- New construction starts in September advanced 10% to a seasonally adjusted annual rate of $604.1 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial.  The increase followed an up-and-down pattern during the previous two months, and brought activity to its highest level so far during 2014.  Nonresidential building registered a sharp gain, helped by an elevated pace for several institutional categories plus another brisk month for manufacturing plants, while the nonbuilding construction sector (public works and electric utilities) also strengthened.  Running counter in September was a decline for residential building.  During the first nine months of 2014, total construction starts on an unadjusted basis were $419.5 billion, a 5% gain compared to last year.

The September data lifted the Dodge Index to 128 (2000=100), up from a revised 116 for August, and slightly ahead of July's 126 (the previous high for this year).  "While the progress for construction starts has been uneven at times on a month-to-month basis, the quarterly averages show that an upward trend has been re-established," stated Robert A. Murray, chief economist for McGraw Hill Construction.  "In this year's first quarter, construction starts fell back 10%, but then climbed 6% in the second quarter and another 6% in the third quarter.  A key factor in keeping the construction expansion going in 2014 has been the greater role now being played by nonresidential building.  Commercial building has continued to see moderate growth from low levels, and the manufacturing building category is still showing a surge of chemical and energy-related plants reach groundbreaking.  What's different in 2014 is that the institutional structure types are now beginning to contribute to the nonresidential building upturn.  In contrast, both public works and electric utilities have generally lost momentum during 2014, notwithstanding their strong showing in September.  And, residential building is now providing a much smaller lift than in the past two years, as the sluggish performance by single family housing has outweighed further gains by multifamily housing."

Nonresidential building in September increased 15% to $228.5 billion (annual rate), after pulling back in August.  The institutional building group soared 33%, with substantial support coming from a 322% hike for the amusement and recreational category, which reflected the start of the $948 million Atlanta Falcons retractable-roof stadium in Atlanta GA and $717 million for the casino portion of the $925 million National Harbor MGM Casino Resort in Oxon Hill MD. Also climbing sharply in September was transportation terminal work, up 171%, led by the $240 million renovation of the 95th Street train and bus terminal in Chicago IL and a $144 million aircraft hangar in Wichita KS.  Educational facilities, the largest nonresidential building category by dollar volume, climbed 34% in September.  Large projects that helped to lift the educational total included a $150 million research lab in Cambridge MA, plus several sizeable high schools – two in Texas valued at $150 million and $100 million respectively, and a $130 million high school in the state of Washington.  Through the first nine months of 2014, the educational facilities category increased 10% from a year ago, including a 16% gain for high schools.  The public buildings category (courthouses and detention facilities) in September grew 11%, but religious buildings fell 30%.  The healthcare facilities category in September plunged 44%, sliding back from a strong August, although the latest month did include the start of a $206 million hospital expansion in San Antonio TX.

The manufacturing plant category in September surged 105%, continuing to show the highly volatile month-to-month behavior that's been present during 2014.  Providing the upward push in September was the start of a $1.3 billion methanol plant in Louisiana and a $225 million tire manufacturing plant in Georgia.  The commercial building group in September fell 15%, retreating from its heightened amount in August.  Store construction declined 22%, after being lifted in August by the $157 million retail portion of the $957 million Nordstrom Tower in New York NY.  Office construction dropped 23%, although September did include the start of such projects as a $700 million data center for Microsoft in West Des Moines IA, a $250 million office tower in Chicago IL, a $105 million office tower in Houston TX, and a $100 million headquarters building for American Greetings in Westlake OH.  Hotel construction in September slipped a modest 1%, with some support coming from $140 million for the hotel portion of the National Harbor MGM Casino Resort in Oxon Hill MD.  Warehouse construction was the one commercial structure type able to post a gain in September, rising 2% with the help of groundbreaking for a $90 million distribution center in Georgia.

Nonbuilding construction, at $162.9 billion (annual rate), jumped 38% in September.  The electric utility category, which has trended downward for the past year and a half, climbed 107% from its lackluster August pace.  There were two very large electric power plant projects included as September starts – a $1.7 billion retrofit of a coal-fired power plant in Illinois and a $1.0 billion solar power facility in Nevada.  The public works project types as a whole advanced 26% in September.  The miscellaneous public works category increased 83%, which reflected the start of the $834 million Regional Connector Transit Corridor light rail project in Los Angeles CA, a $204 million liquefied natural gas pipeline project in Tucson AZ, and a $150 million gas main replacement project in Hackensack NJ.  The miscellaneous public works category in September also included groundbreaking for the $672 million Atlanta Braves baseball stadium in Smyrna GA.  (In the Dodge classification of sports arenas and stadiums, projects with a roof are included in the amusement category while projects without a roof are included in the miscellaneous public works category.)  River/harbor development in September climbed 40%, lifted by a $117 million storm sewer project in New Orleans LA, while sewer construction rose 31% with the boost coming from a $285 million waste water treatment plant in Baltimore MD.  Highways and bridges each climbed 8% in September, although both are still trending downward as shown by the following year-to-dates declines – highways, down 11%; and bridges, down 21%.  Water supply construction was the one public works category to lose momentum in September, sliding 27%.

Residential building in September dropped 9% to $212.7 billion (annual rate).  Multifamily housing fell 23%, retreating from the strong activity that was reported in August. Even with this decline, September still included groundbreaking for four multifamily projects valued each in excess of $100 million.  They were the following – a $266 million condominium hotel in Hollywood CA, the $230 million multifamily portion of a $370 million mixed-use project in Washington DC, a $215 million condominium complex in Honolulu HI, and a $183 million condominium tower in Miami FL.  Through the first nine months of 2014, the top five metropolitan areas in terms of the dollar amount of new multifamily projects were – New York NY, Washington DC, Miami FL, Los Angeles CA, and San Francisco CA.  Metropolitan areas ranked six through ten were – Dallas-Ft. Worth TX, Boston MA, Houston TX, Seattle WA, and Denver CO.  Single family housing in September slipped 3%, marking the third straight month of modest erosion after a brief pickup in late spring, which in a broad sense maintains the flat pattern that's been present throughout 2014.  In September, weaker single family construction was reported in the South Atlantic, down 6%; the South Central, down 4%; and the West, down 3%; while gains were reported in the Midwest and Northeast, up 2% and 4% respectively.  Murray indicated, "This year's stall for single family housing means that the lift provided to total construction is much less than what occurred during the prior two years, when single family housing advanced 29% in 2012 and 26% in 2013.  The 20% down payment requirement, generally in effect since the end of the financial crisis, has made it difficult for lower and middle income households to get approved for a mortgage, and more attention is now being directed by federal officials at ways to expand access to home loans."

The 5% gain for total construction starts on an unadjusted basis during the first nine months of 2014 was the result of a varied pattern by major construction sector.  Nonresidential building climbed 17% year-to-date, due to this performance by segment – commercial building, up 13%; manufacturing building, up 112%; and institutional building, up 5%.  Residential building grew 6% year-to-date, with single family housing up only 1% while multifamily housing advanced 20%.  Nonbuilding construction decreased 9% year-to-date, with public works down 8% and electric utilities down 13%.  By geography, total construction starts in the first nine months of 2014 revealed these gains for the five major regions – the South Central, up 15%; the South Atlantic, up 5%; the Northeast, up 4%; and the Midwest and West, each up 1%.

September 2014 Construction Starts

September 2014 Construction Starts

Monthly Summary of Construction Starts
Prepared by McGraw Hill Construction Research & Analytics

The Dodge Index
(Year 2000=100, Seasonally Adjusted)

September.2014...128
August 2014.........116

About McGraw Hill Construction: McGraw Hill Construction provides essential data, news, insights, and intelligence to better inform construction professionals' decisions. McGraw Hill Construction's data, analytics, and media businesses – Dodge, Sweets, Architectural Record, and Engineering News-Record  – create opportunities for owners, architects, engineers, contractors, building product manufacturers, and distributors to strengthen their market position, size their markets, prioritize prospects, and target and build relationships that will win more business. McGraw Hill Construction serves more than one million customers through its trends and forecasts, industry news, and leading platform of construction data, benchmarks, and analytics, including Dodge MarketShare™, Dodge BuildShare®, and Dodge SpecShare®. Construction data is available for North American and global markets. To learn more, visit www.construction.com.

About McGraw Hill Financial: McGraw Hill Financial is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's iconic brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 18,000 employees in 30 countries. Additional information is available at www.mhfi.com.

Media Contact:
Evelyn O'Neill, Marketing Communications:
McGraw Hill Construction, +1 212-904-3322, [email protected]

Photo - http://photos.prnewswire.com/prnh/20141020/153041

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/construction-starts-in-september-climb-10-percent-602293464.html

SOURCE McGraw Hill Construction

Related Links

http://www.construction.com

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED