Non-Residential Building

Non-residential building in March dropped 2% to $136.2 billion (annual rate), as the commercial categories generally fell back from recent gains.  Office construction in March retreated 34% after its improved February amount, even with groundbreaking for such projects as a $90-million office tower in McLean, Va., and a $72-million office and research campus in Sunnyvale, Calif. 

Store construction in March fell 19%, and hotel construction dropped 18% despite the start of the $69-million hotel portion of the $210-million hotel and condominium tower in Chicago. Warehouse construction was the one commercial category to register a March gain, climbing 45%, with the boost coming from the start of a $130-million Amazon distribution center in New Jersey.

The institutional categories were mixed in March. Education-related buildings improved 4%, helped by the March start of a $68-million primary school in Queens, N.Y., a $66-million high school in Wilmington, Mass., and a $65-million academic building for the University of Massachusetts in Dorchester. Health-care facilities in March climbed 21%, reflecting groundbreaking for a $110-million hospital in Braselton, Ga., and a $90-million medical center in Cape Girardeau, Mo.

On the negative side, declines were reported in March for amusement-related projects, down 5%; public buildings (courthouses and detention facilities), down 21%; and transportation terminals, down 23%. The manufacturing plant category in March provided support to the nonresidential building total, jumping 175% after a very weak February, with the lift coming from the start of a $500-million blood plasma fractionation plant in Georgia.

The “no change” for total construction starts on an unadjusted basis for the first three months of 2013 relative to last year was due to varied behavior by the major construction sectors. Residential building registered healthy year-to-date growth, climbing 33% with similar gains for single-family housing, up 33%; and multifamily housing, up 32%. Non-residential building in the January-March period of 2013 dropped 9%, reflecting an 18% decline for the institutional categories. On the plus side for non-residential building, the commercial categories were up 2% year-to-date while manufacturing plant construction grew 20%.

Non-building construction in the first three months of 2013 fell 23%, as a 75% plunge for electric utilities outweighed a 19% gain for public works. The year-to-date decline for electric utilities reflects the comparison to a robust amount of electric utility starts in first three months of 2012, which included $8.5 billion for Units 3 and 4 at the Vogtle nuclear power facility in Georgia. If the electric utility category is excluded from the year-to-date comparisons, then total construction in the first three months of 2013 would be up 14%.

In terms of geography, total construction starts in the January-March period of 2013 showed gains in three regions—the Northeast, up 20%; the South Central, up 14%; and the West, up 3%. Year-to-date declines were reported in two regions—the Midwest, down 1% and the South Atlantic, down 22% (which was due to a steep reduction for that region’s new electric utility starts compared to last year).

Added perspective comes from looking at 12-month moving totals, in this case the 12 months ending March 2013 versus the 12 months ending March 2012.  On this basis, total construction starts were up 6%, as the result of a 32% increase for residential building combined with 5% declines for both nonresidential building and non-building construction.

By region, the 12 months ending March 2013 showed this pattern for total construction—the South Central, up 16%; the Northeast, up 11%; the Midwest, up 8%; the South Atlantic, up 1%; and the West, down 2%.