Nonresidential building, at $153.9 billion (annual rate), climbed 12% in May. The institutional side of the nonresidential market showed moderate improvement for the second month in a row, after a weak start to 2012, although its rate in May was still 13% below its average monthly pace during 2011. The educational building category jumped 22% in May, helped by the start of two large museum projects – the $290-million National Museum of African-American History and Culture in Washington, D.C., and a $100-million art museum in Los Angeles. Other large educational projects reported as May starts included a $100-million center for energy and the environment at Princeton University in Princeton, N.J., and the $100-million Park Avenue Armory redevelopment project in New York City.
Transportation terminal work in May soared 134%, helped by the start of the $160-million Delta Airlines hub redevelopment at LaGuardia Airport in New York. The public buildings category (which includes courthouses and detention facilities) increased 16% in May, helped by the start of a $169-million courthouse renovation in Los Angeles. On the negative side, the health-care facilities category in May decreased 29% after an elevated April, although May did include the start of large healthcare projects in Chicago ($199 million) and Jefferson City, Mo. ($140 million). Reduced contracting in May was also reported for amusement-related work, down 20%; and churches, down 12%.
The commercial categories in May were mixed. Office construction climbed 32%, with May coming in 17% above the category's average monthly pace during 2011. Large office projects that reached groundbreaking in May included a $200-million data center in Clifton, N.J., a $120-million corporate headquarters for Panasonic in Newark, N.J., and a $99-million expansion to a corporate headquarters for Hyundai in Fountain Valley, Calif.
Hotel construction in May jumped 48%, with support coming from $100 million estimated for the hotel portion of the $300-million Baccarat Luxury Hotel and Condominium project in New York City. In contrast, store construction in May retreated 29% after its improved April volume, while warehouse construction slipped 16%. The manufacturing plant category in May contributed to the gain for nonresidential building, surging 108% with the help of such projects as a $346-million metals processing facility in North Carolina, a $217-million automotive plant in Alabama, and a $120-million biofuels waste-to-ethanol plant in Nevada.
Residential building in May increased 8% to $158.9 billion (annual rate). Multifamily housing showed renewed strength after pausing in April, rising 33%, with May coming in 35% above this category’s average monthly pace during 2011. Large multifamily projects in May included $200 million estimated for the condominium portion of the Baccarat Luxury Hotel and Condominium project in New York City, $117 million estimated for the apartment portion of a large mixed-use project in New York City, and $87 million for an apartment building complex in Boston.
Single-family housing in May grew 2%, and since February 2011, the dollar amount for single-family housing has shown slight gains in 12 out of 15 months. The May volume for single-family housing was 24% above its average monthly pace during 2011.
McGraw-Hill chief economist Bob Murray noted: “While single-family housing still remains at an extremely low level, it has been showing small yet steady gains for more than a year now, indicating that its modest upward trend is beginning to acquire some traction.”
The 6% increase for total construction starts on an unadjusted basis during the first five months of 2012 was the result of greater activity for two of the three main construction sectors. Residential building year-to-date advanced 24%, with similar growth for single-family housing, up 23%, and multifamily housing, up 26%. Nonbuilding construction climbed 20% year-to-date, the result of a 74% surge for electric utilities combined with a 5% reduction for public works. Nonresidential building was the one major sector to report a year-to-date decline, falling 18%, with decreased activity for these segments – commercial building, down 5%; institutional building, down 21%; and manufacturing plants, down 38%.
The year-to-date decline for nonresidential building has been getting smaller as 2012 has progressed, although it still reflects the comparison to the briefly elevated amount during the early months of 2011, which included such projects as the $1.2-billion redevelopment of the Delta Terminal at New York’s JFK International Airport, the $1.1-billion National Security Agency data center in Utah, and a $900-million semiconductor plant in Oregon.
By geography, total construction starts during the first five months of 2012 showed a large gain in the South Atlantic, up 67%, lifted by work at the nuclear power facilities in Georgia and South Carolina. The Midwest showed an 8% year-to-date gain, while declines were reported in the Northeast, down 8%; the West, down 11%; and the South Central, down 14%.