At a seasonally adjusted annual rate of $433.9 billion, new construction starts in August climbed 8% relative to July, according to McGraw-Hill Construction. A McGraw-Hill press release offering analysis of the current construction climate said after declines in the previous three months, the August pickup was the result of greater activity for each of construction’s three main groups — nonresidential building, residential building and nonbuilding construction. During the first eight months of 2012, total construction starts on an unadjusted basis came in at $304.5 billion, up 3% from the same period a year ago.
Robert Murray, V.P. of economic affairs for McGraw-Hill Construction, said in that press release, “Construction starts continue to exhibit an up-and-down pattern, with the end result being that overall construction activity has yet to show much in the way of sustained growth. Gains for some project types continue to be offset by declines for other project types. So far in 2012, housing has been one of the brighter areas for construction. Multi-family housing is strengthening, and single-family housing is finally registering steady growth, although in a very gradual manner.
“The commercial project types have shown hesitant upward movement, while this year’s earlier weakness for the institutional sector seems to be easing a bit. Electric utility construction is seeing another year of exceptionally strong activity, but the public works sector continues to deal with spending limitations. If overall construction activity is to establish a more solid upward trend, the degree of uncertainty surrounding the U.S. economy needs to recede, which may prove difficult to achieve in the near term given the impending ‘fiscal cliff’ at the end of 2012.”
Nonresidential construction. McGraw-Hill Construction said nonresidential building in August grew 7% to an annual rate of $147.7 billion. Much of the boost in August came from the institutional categories, in contrast to this sector’s generally weak performance during most of 2012. Educational facilities in August increased 17%, helped by a greater amount of new high school construction projects, with the three largest located in Indiana ($100 million), New York ($88 million), and Massachusetts ($70 million). Several university-related projects also contributed to the August gain for educational facilities, led by the start of a $90 million science building at Middle Tennessee State University in Murfreesboro, Tenn., and a $75 million building at George Washington University’s School of Public Health in Washington D.C. The transportation terminal category in August jumped 111%, reflecting $325 million for work on a New York subway station and a $200 million expansion to the JetBlue terminal at New York’s JFK International Airport.
Office construction in August retreated 5%, even with groundbreakings for projects such as Freightquote’s new $44 million headquarters in Kansas City, Mo. Showing slight growth in August was hotel construction, which edged up 2% with the help of a $50 million Marriott hotel project in Milwaukee, Wis. Manufacturing plant construction also posted a slight gain, increasing 1%. Large manufacturing projects that reached groundbreaking in August included Intel’s $300 million semiconductor R&D facility in Chandler, Ariz., and a $150 million Michelin tire plant in South Carolina.
Residential construction. Residential building at $168.9 billion (annual rate), climbed 9% in August. Multi-family housing bounced back 35% after pausing in July, matching its strong June pace. Large multi-family projects that reached groundbreaking in August included five that were valued at $100 million or more — a $150 million apartment building in Brooklyn, N.Y.; a $132 million condominium complex in Key Biscayne, Fla.; a $127 million residential tower in Boston; a $100 million apartment building in Long Island City, N.Y.; and a $100 million apartment building in Washington, D.C. Through the first eight months of 2012, the most active metropolitan areas in terms of the dollar volume of new multi-family starts were New York, Washington, D.C., Los Angeles, Miami and Boston.
Nonbuilding construction. Nonbuilding construction in August increased 8% to $117.3 billion (annual rate). After the steep declines of the previous three months, electric utility construction in August surged 103%. Large utility projects reported as August starts were led by LS Power’s $550 million Arlington Valley Solar Energy II solar facility in Arizona; a $520 million solar-power facility in California; and a gas-fired power plant in New Jersey.