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San Diego Construction1024

Nonresidential Construction Starts Still Showing Resilience Through May

June 23, 2022
Year-to-date, total construction was +6% higher in the first five months of 2022 compared to the same period of 2021.

Total construction starts rose +4% in May to a seasonally adjusted annual rate of $979.5 billion, according to Dodge Construction Network. Nonresidential building starts rose +20%, while residential starts fell by -4% and nonbuilding lost -2% during the month.

Year-to-date, total construction was +6% higher in the first five months of 2022 compared to the same period of 2021. Nonresidential building starts rose +17% and residential starts gained +3%, while nonbuilding starts were -5% lower. For the 12 months ending May 2022, total construction starts were +10% above the 12 months ending May 2021. Nonresidential starts were +20% higher, residential starts gained +8% and nonbuilding starts were down -3% over this period.

“The construction sector has become increasingly bifurcated over the past several months,” said Richard Branch, chief economist for Dodge Construction Network, in the press release. “Nonresidential building construction is clearly trending higher with broad-based resilience across the commercial, institutional and manufacturing spaces. However, growth in the residential market has been choked off by higher mortgage rates and rapidly falling demand for single-family housing.

"Nonbuilding starts, meanwhile, have yet to fully realize the dollars authorized by the infrastructure act. While the overall trend in construction starts is positive, the very aggressive stance taken by the Federal Reserve to combat inflation risks slowing the momentum in construction.”

Here’s a breakdown of construction activity by individual segment:

Nonresidential

Nonresidential building starts rose +20% in May to a seasonally adjusted annual rate of $355.1 billion. In May, commercial starts rose +35% due to a large gain in office starts. Institutional starts rose +9% and manufacturing starts fell -5%. Through the first five months of 2022, nonresidential building starts were +17% higher than during the first five months of 2021. Commercial starts advanced +17% and institutional starts rose +2%, while manufacturing starts were +97% higher on a year-to-date basis.

The Dodge Construction Network said that a 12-month rolling sum basis, commercial building starts grew +18%, institutional starts rose +9%, and manufacturing starts swelled +116% on a 12-month rolling sum basis. The largest nonresidential building projects to break ground in May were the $950-million Meta Hyperscale data center in Temple, TX; the $940-million Digital Dulles data center in Dulles, VA; and a $540-million mixed-use building in New York, NY.

Residential

Residential building starts fell -4% in May to a seasonally adjusted annual rate of $442.2 billion. Single-family starts dropped -10% and multi-family starts rose 8%. Through the first five months of 2022, residential starts were +3% higher than in the first five months of 2021. Multi-family starts were up +21%, while single-family housing slipped -3%.

For the 12 months ending May 2022, residential starts improved +8% from the same period ending May 2021. Single-family starts were +2% higher and multi-family starts were +27% stronger on a 12-month rolling sum basis.

The largest multi-family structures to break ground in May were the $800-million Two Bridges building in New York; the $329-million Reston Next residential building in Reston, VA; and the $294-million 500 Main Street residential building in New Rochelle, NY.

Nonbuilding

Nonbuilding construction starts fell -2% in May to a seasonally adjusted annual rate of $182.2 billion. Through the first five months of the year, total nonbuilding starts were -5% lower than in 2021. Highway and bridge starts gained +22% through five months and environmental public works projects were +2% higher. At the same time, miscellaneous nonbuilding and utility/gas plants starts dropped -35% and -41%, respectively, through five months.

The largest nonbuilding projects to break ground in May were the $1.6 billion- Samson Solar Energy Center in Franklin, Lamar and Red River Counties, TX; and the $523-million Danish Fields Solar Farm and Battery Storage in Matagorda County, TX.