During the first half of 2019, six of the top 10 U.S. metropolitan markets for commercial and multifamily construction starts ranked by dollar volume registered greater activity compared to a year ago, according to Dodge Data & Analytics. Of the top 20 markets, 13 were able to register gains. At the U.S. level, the volume of commercial and multifamily construction starts during the first half of 2019 was $101.4 billion, down 6 percent from last year’s $107.4 billion.
The New York, N.Y., metropolitan area, at $15.0 billion, maintained its longstanding number-one ranking by dollar volume, although it settled back 8 percent from a year ago.
The Washington, D.C., metropolitan area, at $7.1 billion, was ranked number two in terms of the dollar amount of commercial and multifamily construction starts during the first half of 2019. Soaring 50 percent compared to a year ago, the Washington, D.C., market showed the volume of office construction starts doubling in size relative to last year.
Of the remaining markets in the top 10, the metropolitan areas showing growth during the first half of 2019 versus a year ago were Boston ($3.8 billion), up 2 percent; Los Angeles ($3.8 billion), up 14 percent; Atlanta ($3.4 billion), up 69 percent; Chicago ($3.0 billion), up 0.4 percent; and Austin, Texas ($2.6 billion), up 39 percent. The remaining markets in the top 10 showing declines were Dallas–Fort Worth ($3.4 billion), down 7 percent; Miami ($3.1 billion), down 38 percent; and Houston ($2.5 billion), down 4 percent.
For the metropolitan areas ranked 11 through 20, the seven that registered first half 2019 gains were Philadelphia ($2.5 billion), up 34 percent; Nashville ($2.2 billion), up 112 percent; Minneapolis ($1.8 billion), up 28 percent; Orlando, Fla. ($1.8 billion), up 8 percent; Portland, Ore. ($1.4 billion), up 22 percent; Cincinnati ($1.4 billion), up 130 percent; and Columbus, Ohio ($1.2 billion), up 20 percent. The three metropolitan areas reporting declines in markets ranked 11 through 20 were San Francisco ($2.1 billion), down 24 percent; Phoenix ($1.5 billion), down 5 percent; and Seattle ($1.5 billion), down 57 percent.
The commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing. Not included in this ranking are institutional building projects (e.g., educational facilities, hospitals, convention centers and transportation terminals) and manufacturing buildings. At the U.S. level, the 6 percent decline for commercial and multifamily construction starts in the first half of 2019 was due entirely to a slower pace for multifamily housing, which dropped 13 percent, while commercial building held steady with its first half 2018 amount.
“So far in 2019, multifamily housing has settled back from last year’s robust amount, although this year’s volume can still be regarded as healthy by recent standards,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “Due to the strong 2018 economy, market fundamentals for multifamily housing such as occupancies and rents strengthened, and have not yet begun to erode in a widespread manner. At the same time, there are concerns that multifamily housing is overbuilt in some markets, and the banking sector continues to take a cautious stance towards multifamily lending. As for commercial building, office construction starts in 2019 have seen modest expansion compared to last year, helped by groundbreaking for large office projects and the support coming from the continued strength of data center projects. Hotel construction has stayed close to last year’s pace, but warehouse construction has begun to slip and store construction has seen further declines. Going forward, a slowing economy would lead to more visible erosion in market fundamentals, which would contribute to a more subdued pace for commercial building starts."
