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August 5, 2022   

Top 20 U.S. Markets see Mixed Construction Activity

2022 08 us market construction acticity.jpg

  • Dallas is up 72% YTD.  Los Angeles is down 14%.  Florida is booming.

  • Twelve of the top 20 metro areas posted gains during 2022’s first six months

 

HAMILTON, New Jersey — During the first six months of the year, the value of commercial and multifamily construction starts in the top 20 metropolitan areas of the U.S. increased 24% from 2021, according to Dodge Construction Network.

Nationally, commercial and multifamily construction starts increased 18% year-to-date. In the top 10 metro areas, commercial and multifamily starts rose 28% in the first six months of 2022 compared to that of 2021. Three metro areas (Seattle, WA, Los Angeles, CA, and Philadelphia, PA) posted a decline. In metro areas ranked 11 through 20, commercial and multifamily starts rose 16% on year-to-date through six months, although five metro areas (Boston, MA, Chicago, IL, Nashville, TN, Minneapolis, MN, and Kansas City, MO) slipped from the first half of 2021.

Commercial and multifamily construction has made impressive gains in 2022 largely driven by rising demand for apartments and condos. A nascent recovery in the commercial sector, however, has created more broad-based improvements across the country. These increases are even more considerable as the sector continues to combat rising prices, shortages of key materials and labor, and higher interest rates.

The New York metropolitan area was the top market for commercial and multifamily starts during the first half of 2022 at $15.3 billion, an increase of 20% from the first half of 2021. The Dallas, TX, metropolitan area was in second place, totaling $8.1 billion in the first six months of 2022, a 72% year-to-date gain. The Washington, D.C., metro area ranked third during the first half of 2022 with $5.5 billion in starts, a 35% gain over 2021.

The remaining top 10 metropolitan areas through the first half of 2022 were:

  • Miami, FL, up 31% ($4.5 billion)
  • Austin, TX, up 70% ($4.3 billion)
  • Phoenix, AZ, up 53% ($4.2 billion)
  • Atlanta, GA, up 68% ($4.2 billion)
  • Seattle, WA, down 10% ($3.5 billion)
  • Los Angeles, CA, down 14% ($3.4 billion)
  • Philadelphia, PA, down 3% ($3.2 billion).

During the first half of 2022, the top 10 metropolitan areas accounted for 40% of all commercial and multifamily starts in the United States, up from 37% during the first six months of 2021.

The second-largest group included:

  • Houston, TX, up 20% ($3.2 billion)
  • Boston, MA, down 25% ($3.2 billion)
  • Denver, CO, up 29% ($2.8 billion)
  • Orlando, FL, up 66% ($2.6 billion)
  • Tampa, FL, up 83% ($2.5 billion)
  • Chicago, IL, down 1% ($2.4 billion)
  • San Jose, CA, up 186% ($2.1 billion)
  • Nashville, TN, down 2% ($1.9 billion)
  • Minneapolis, MN-WI, down 10% ($1.8 billion)
  • Kansas City, MO-KS, down 1% ($1.7 billion)

This second group of metro areas accounted for 16% of all commercial and multifamily starts in the United States during the first six months of 2022, down from 18% in the first half of 2021.

Commercial and multifamily starts are comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing. Not included in this ranking are institutional projects (e.g., educational facilities, hospitals, convention centers, casinos, transportation terminals), manufacturing buildings, single family housing, public works and electric utilities/gas plants.

In the first half of 2022, total U.S. commercial and multifamily building starts rose 18% from the first half of 2021 to $139.5 billion. Nationally, commercial starts climbed 14% year-to-date through six months to $70.0 billion, and multifamily starts gained 24% to $69.6 billion. Within the top 10 metro areas, commercial building starts rose 19% to $24.8 billion in the first six months of 2022, and multifamily starts gained 36% to $31.4 billion. Within the second-largest group of metropolitan areas, commercial building starts moved 19% higher through six months of 2022, and multifamily starts improved 13%.

“The construction sector is at a cross-roads,” stated Richard Branch, Chief Economist for Dodge Construction Network. “The recovery from the pandemic morphed in 2022 by encompassing more sectors than just warehouses and single family housing despite rampant inflation in construction materials, a lack of key goods, and a stark shortage of skilled construction labor. Even though the level of projects currently in planning portends a bright second half to the year, the Federal Reserve’s fight against inflation has taken a toll on the economy and raised concerns that a recession could occur. As a result, construction starts are likely to move sideways over the second half of the year and potentially stall as the calendar shifts into 2023.”

In the New York, NY, metropolitan area, commercial and multifamily construction starts rose 20% during the first half of 2022 compared to the same time frame in 2021. Multifamily starts were up an impressive 51% year-to-date. The largest multifamily projects to break ground during the first half of the year were the $800 million Two Bridges mixed-use complex, the $450 million Neptune/Sixth mixed-use building, and the $425 million 250 Water Street apartments. Year-to-date, commercial starts were down 22% through the first six months of 2022, with retail as the only sector to show growth. The largest commercial projects to get underway in the first half of 2022 were the $540 million 520 5th Avenue office building, the $200 million Belmont Park Retail Village, and the $76 million Facebook office renovation at 50 Hudson Yards.

Commercial and multifamily starts in the Dallas, TX, metro area soared 72% to $8.1 billion year-to-date through the first six months of 2022. Commercial starts increased 81% through the same six months due to large gains in the office and warehouse sectors. The largest commercial projects to get underway in the first six months were two Walmart distribution centers valued at $206 million and $155 million, respectively, and the $115 million Ryan Office Tower. Through the first six months of 2022, multifamily starts were 60% higher than in 2021. The largest multifamily projects to start were the $117 million third phase of the Trinity Green apartments, the $85 million Langdon North and South apartments, and the $70 million Enclave Frankford apartments.

In the Washington, D.C., metropolitan area, commercial and multifamily construction starts rose 35% in the first half of 2022 to $5.5 billion. On a year-to-date basis, multifamily starts gained 14% through six months. The largest multifamily projects to break ground during the first six months were the $329 million Reston Next Block D mixed-use project, the $125 million Atworth College Park affordable housing project, and the $95 million Pooks Hill Road apartments. Through six months of 2022, commercial starts sped ahead 57%, with retail as the only sector to post a decline. The largest commercial projects to get started through the first six months were $940 million Digital Dulles Buildings 7 and 8 data center project, the $400 million The Rose Gaming Resort, and the $208 million Equinix data center.

The Miami, FL, commercial and multifamily building starts rose 31% through the first six months of 2022 to $4.5 billion. Commercial starts in Miami were up a scant 2% year-to-date through those six months as gains in office and retail starts were mostly offset by declines in parking, hotel and warehouse. The largest commercial projects to break ground during the first half of 2022 were the $300 million Royal Caribbean headquarters building, the $27 million Publix Supermarket and the $25 million Las Olas Hotel. Miami’s multifamily housing starts rose a more solid 51% during the first half. The largest multifamily buildings to break ground were the $188 million Alina 210 and 220 residences, the $165 million first phase of the Nema Miami apartments, and the $150 million Selene Oceanfront Residences.

Commercial and multifamily starts in the Austin, TX, metropolitan area swelled 70% during the first half of 2022 to $4.3 billion. Year-to-date through six months, multifamily construction rose 25%. The largest multifamily structures to break ground during the first half were the $369 million 5th & Colorado mixed-use tower, the $200 million Union on San Antonio apartments, and the $66 million Parkside village apartments. Through the first six months of 2022, commercial starts have more than doubled relative to the first six months of 2021 due to groundbreakings for several large office projects; parking, hotel, and retail starts were also higher. The largest commercial projects to get started through the six month mark of 2022 were the $520 million Waller Creek office and mixed-use building, the $375 million Republic office tower and the $180 million Springdale Green office building.

In Phoenix, AZ, commercial and multifamily starts were up 53% through the first six months of 2022 to $4.2 billion. Multifamily starts were up 8% year-to-date through June. The largest multifamily projects to break ground during the first half of the year were the $231 million Central Transit State mixed-use building, $150 million Palm Court Tower, and the $88 million Copa Flats apartment complex. Through June 2022, total commercial starts rose 88% compared to the first six months of 2021. Much of this growth was due to a sharp increase in warehouse starts, although other commercial sectors also contributed. The largest commercial projects to get underway were the $460 million Park 303 warehouse building, the $180 million first phase of the CapRock West 202 warehouse, and the $125 million second phase of the Iron Mountain data center.

Atlanta, GA, commercial and multifamily starts were 68% higher at $4.2 billion on a year-to-date basis through the first six months of 2022. Commercial starts in Atlanta were up 45% led by gains in parking, office, retail and warehouse construction. The largest commercial projects to get started during the first half of 2022 were the $150 million Interlock II office building, the $80 million South Highway 41 warehouse building, and the $45 million Gardner Logistics Park warehouse. During the first half of 2022, multifamily construction doubled from the same period of 2021. The largest multifamily buildings to get started were the $120 million Rhapsody apartments, the $110 million The Dillion condominium tower, and the $91 million Averly East Village apartments.

Seattle, WA, commercial and multifamily construction starts were down 10% to $3.5 billion during the first six months of 2022. Commercial starts lost 34% year-to-date due to a pullback in office and warehouse starts. Retail and hotel starts advanced. The largest commercial projects to break ground were the $265 million Washington 1000 office tower, the $137 million first phase of the Four106 office building, and the $60 million fifth phase of the Spring District office project. Multifamily starts during the first half of 2022 rose 25% over the first half of 2021. The largest multifamily structures to break ground during the first six months of the year were the $400 million Civic Square condominiums, the $371 million Seattle House mixed-use building, and the $125 million The Victor mixed-use building.

In Los Angeles, CA, commercial and multifamily starts were down 14% to $3.4 billion year-to-date through the first six months of 2022. Through the first half of 2022, multifamily starts were 7% lower than in the first six months of 2021. The largest multifamily projects to get underway so far this year were the $250 million Olympic & Hill mixed-use building, the $177 million phase B of the Metro Heights at Montebello Hills, and the $173 million 2143 Violet Street mixed-use building. Commercial starts were down 25% during the first half of the year, with offices the only sector able to grow. The largest commercial projects to break ground in the first six months of 2022 were the $80 million LA Chargers Team Headquarters office, the $66 million NBC Universal Campus Office, and a $54 million parking facility.

Commercial and multifamily building starts in Philadelphia, PA, slipped 3% during the first half of 2022 to $3.2 billion. Commercial starts were 24% lower at the halfway mark of the year with retail and parking the only sectors to show growth. The largest commercial projects to break ground at the six month mark were a $90 million warehouse on Churchmans Road in Newark, DE, the $74 million first phase of the Keystone Trade Center building, and the $60 million 2020 Logistics Center @ Mansfield warehouse. In the first half of 2022, multifamily starts rose 14% with the largest projects to break ground including the $320 million Broad & Washington mixed-use development, the $125 million Vine Street development, and the $112 million 204 S. 12th street mixed-use building.

 

 

 

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