Even though the construction market appears to have gotten off to a slow start in 2020, there’s still quite a few trophy jobs breaking ground or in the planning stage.
As you can see in the table on page 2, some sizeable jobs in all regions of the country and in a wide variety of construction niches are now making news. For instance, Google recently broke ground on a $450-million office building in Los Angeles and the $375-million Block 185@Green Water project in Austin, TX. And according to The Mercury News, Google will also be a tenant for a combined total of over 1 million square feet of office space in Silicon Valley, including its 595,000-sq-ft Googleplex now under construction. The article said in total there’s 10 million square feet of office and other commercial construction underway near San Jose, CA, and throughout Santa Clara County.
Silicon Valley isn’t the only area enjoying an active construction scene. In Atlanta, 26 major projects are in the pipeline, according to www.curbed.com, and Philadelphia has more office projects underway or in development than any time since the 1990s. Electrical Marketing’s editors also found quite a few new solar, wind and other green projects, including Lucid Motors’ Arizona factory to build upscale electric vehicles and Cree’s semiconductor plant in upstate New York that will produce components for electric-vehicle batteries.
Despite these high-profile projects, the latest construction data points to a slowing market. Total construction starts slipped -6% from December to January to a seasonally adjusted annual rate of $759.2 billion, according to Dodge Data & Analytics. All three major categories moved lower in January —residential building starts fell -8%, nonresidential building lost -6%, and nonbuilding starts moved 2% lower.
With only one limited month of data available for 2020, Dodge Data & Analytics said it’s difficult to ascribe a 2020 trend. For the 12 months ending January 2020, total construction starts were +1% higher than during the previous 12-month period.
By major category, residential building starts were -1% lower and nonresidential building starts were down by less than a percentage point, but nonbuilding construction was +8% higher during the 12 months that ended in January 2020.
“Coming in slightly weaker than the previous month, January’s starts did little to change our view that construction starts will remain near their recent highs in 2020 even though they are likely to fall as the economy slows,” said Richard Branch, chief economist of Dodge Data and Analytics, in the press release.
Nonbuilding construction starts moved -2% lower in January, falling to a seasonally adjusted annual rate of $167.2 billion. The largest nonbuilding construction project to break ground in January was the $705 million extension of the South Central LRT in Phoenix, AZ. Also starting in January was the $575 million Permian Energy Center solar project in Andrews County, TX, and the $550 million Wheatridge wind and solar project in Lexington, OR.
For the 12 months ending January 2020, total nonbuilding starts were up +8% compared to the twelve months ending January 2019. On the plus side, environmental public works were up +4% and the utilities/gas plants were up an impressive +116%. Nonresidential building starts fell -6% in January to a seasonally adjusted annual rate of $266.6 billion. However, if not for the start of a very large manufacturing project, nonresidential building starts would have declined -11%. In January, manufacturing starts more than doubled, while commercial building starts slipped -16%, and institutional starts fell -6%.
The largest nonresidential building project to break ground in January was the $475-million Cree Semiconductor plant in Marcy, NY mentioned earlier. Also starting was the $476-million BMO Office Tower in Chicago and the $400-million Husky Superior refinery in Superior, WI.
On a 12-month total basis, total nonresidential building starts were less than one percentage point lower than they were in the twelve months ending in January 2019. Commercial starts were +5% higher, while institutional starts fell -3% and manufacturing starts were down -10%.
Residential building starts dropped -8% in January to a seasonally adjusted rate of $325.4 billion. During the month, single family starts fell -5%, while multi-family starts lost -15%.
The largest multi-family structure to break ground during in January was the $300-million Liberty on the River Apartment Tower in Philadelphia. Also starting in January was a $260-million mixed-used building on 10th Avenue in New York, as well as the $249-million Downtown Fifth Luxury Apartments in Miami.
For the 12 months ending in January, total residential starts were -1% lower than the previous 12 months. Single family starts gained +1%, but multi-family building starts were -5% lower.