Nonresidential Building

Nonresidential building in March fell 4% to $122.8 billion (annual rate).  The institutional building sector dropped 7%, due to weaker activity for a majority of its structure types. Health-care facilities in March fell 30%, after showing some improvement during the first two months of 2012. There were a few noteworthy health-care projects that reached groundbreaking in March, including a $140-million hospital expansion in Chattanooga, Tenn., and a $100-million hospital tower in Memphis, but the number of such projects was down from recent months.

“Health-care construction is being restrained in the near term, affected by the increased amount of hospital mergers that have taken place over the past year and the uncertain fate of health-care reform legislation currently under review by the Supreme Court,” Murray noted.

The amusement-related category (convention centers, theaters and sports arenas) dropped 21% in March, and churches also witnessed a 21% decline.  Transportation terminal work in March slipped 9%, while the public buildings category (courthouses and detention facilities) was unchanged. On the plus side, the educational building category in March improved 10%, helped by a $105-million renovation to a science building at the U.S. Military Academy in West Point, N.Y., although March still came in 20% below this category’s average monthly pace during 2011. Manufacturing plant construction in March plunged 61%, as contracting in early 2012 has retreated following the improved activity reported last year.

The commercial sector in March was able to rise 10% from the previous month. Office construction in March grew 9%, supported by a $120-million office building expansion in San Francisco and a $101-million renovation to a federal office building in Cleveland. Warehouse construction in March advanced 19%, aided by the start of several large distribution centers for Amazon.com.

Hotel construction in March jumped 91% relative to a subdued February, helped by groundbreaking for a $67-million resort hotel and casino in Bossier City, La., and a $53-million hotel in Surfside, Fla. Moving the opposite direction in March was store construction, falling 18%, although March did include two $40-million shopping mall renovation and expansion projects, located in Nanuet, N.Y., and Indianapolis.

The 3% shortfall for total construction on an unadjusted basis during the first three months of 2012 was the result of a varied pattern by major sector.  Nonresidential building was down 25% from the first three months of 2011, which had been boosted by the start of several unusual large projects, including a $1.1-billion data center in Utah for the National Security Agency, a $900-million semiconductor plant in Oregon and a $575-million hospital in California.

Nonbuilding construction during the first three months of 2012 managed a 2% gain, as a 38% increase for electric utilities outweighed a 16% drop for public works. Residential building during the first three months of 2012 climbed 21%, featuring year-to-date growth for both sides of the housing market—single-family housing up 22% and multifamily housing up 17%.  By geography, total construction during the first three months of 2012 showed declines in three regions—the South Central, down 23%; the West, down 22%; and the Northeast, down 13%. Year-to-date gains for total construction were reported in the Midwest, up 6%; and the South Atlantic, up 54% (reflecting in large part the boost coming from work at the Vogtle nuclear facility in Georgia).

The “no change” for total construction on a 12-month moving total basis, meaning the 12 months ending March 2012 versus the 12 months ending March 2011, was due to this pattern by major sector: nonresidential building, down 7%; nonbuilding construction, down 3%; and residential building, up 13%.

By geography, the 12 months ending March 2012 showed the following behavior for total construction: the South Central, down 10%; the Northeast, down 7%; the Midwest, down 6%; the West, down 2%; and the South Atlantic, up 27%.