At a seasonally adjusted annual rate of $524.8 billion, new construction starts in November fell 11 percent from the previous month, according to McGraw Hill Construction, a division of McGraw Hill Financial. The downturn followed heightened activity in October, which showed the strongest pace for construction starts so far during 2013. Highway construction was up 9 percent.
Both nonresidential building and nonbuilding construction pulled back from their elevated October amounts. At the same time, residential building showed modest growth in November, continuing the steady upward trend that’s been present during most of 2013. For the first 11 months of 2013, total construction starts on an unadjusted basis came in at $475.3 billion, up 6 percent from the same period a year ago. If the volatile electric utility category is excluded from the year-to-date statistics, total construction starts for the first 11 months of 2013 would be up 14 percent.
Nonresidential building in November dropped 17 percent to $179.3 billion (annual rate), following its elevated activity in October. The manufacturing plant category plunged 86 percent, after being lifted in October by the start of three massive projects each valued in excess of $1 billion. In contrast, the largest manufacturing-related projects reported as November starts were a $94 million biotechnology plant in North Carolina and a $75 million pipe and tube plant in Texas.
Excluding the manufacturing category, nonresidential building in November would have been up 16 percent, supported by the month’s 31 percent jump for the commercial building group.
Hotel construction in November surged 212 percent, boosted by $476 million for the hotel portion of the $700 million 67-story Korean Air Hotel in Los Angeles. Also reported as a November start was $191 million for the hotel portion of a $300 million hotel resort and casino in Durant, Okla. Office construction in November climbed 26 percent, maintaining the growing momentum that’s been present during the second half of 2013. Large Office projects reported as November starts were the $336 million Transbay Office tower in San Francisco, the $265 million State Farm Office complex in Tempe, Ariz., and $160 million for the Office portion of the $700 million Korean Air Hotel project in Los Angeles.
Warehouse construction was particularly strong in November, advancing 82 percent with the help of such projects as a $90 million distribution facility in Union, Ohio, and an $85 million Amazon distribution center in Kenosha, Wis. Store construction was the one commercial category to decline in November, dropping 23 percent with the largest project being a $45 million outlet mall in Tejon Ranch, Calif.
The institutional building group in November slipped 3 percent. Healthcare facilities fell 41 percent, sliding back for the second month in a row after a particularly strong amount in September. The largest healthcare facility projects reported as November starts were a $136 million hospital in Chicago and a $90 million hospital expansion in Long Island City, NY.
The educational building category in November decreased 8 percent from its improved pace in October, with the largest education-related projects being a $125 million museum expansion in Potomac, Md. and a $100 million research facility in Maywood, Ill. The smaller institutional categories showed strong percentage gains in November after a generally weak October. Amusement-related construction advanced 84 percent, led by the start of the $763 million Vikings Multipurpose Stadium in Minneapolis, as well as $109 million for the casino portion of the $300 million hotel resort and casino in Durant, Okla.
Transportation terminal construction in November rose 13 percent, supported by $125 million for the redevelopment of the George Washington Bridge Bus Station in New York. The public buildings and religious categories in November showed large percentage gains from very low October levels, rising 21 percent and 33 percent respectively.
During the first 11 months of 2013, nonresidential building climbed 8 percent relative to the same period a year ago. The commercial categories as a whole were up 16 percent, featuring these across-the-board gains – warehouses, up 32 percent; hotels, up 24 percent; Office buildings, up 23 percent; and stores, up 1 percent. The 2013 increase for stores was restrained by the comparison to 2012 that included the $400 million renovation to Macy’s agship department store in New York.
The manufacturing building category year-to-date climbed 49 percent, helped especially by the three large manufacturing projects reported as October starts. The institutional building group year-to-date was down 2 percent, with the two largest institutional categories performing as follows – educational buildings, unchanged from the previous year; and healthcare facilities, down 4 percent.
The smaller institutional categories showed this yearto- date pattern – amusement-related projects, up 24 percent; transportation terminals, up 5 percent; religious buildings, down 8 percent; and public buildings, down 23 percent.
Nonbuilding construction, at $127.1 billion (annual rate), dropped 21 percent in November. The public works portion of nonbuilding construction fell 23 percent, with the largest decline registered by bridge construction, down 73 percent. The bridge category in October had been boosted by $2.8 billion for the start of structural work on the Tappan Zee Bridge replacement project across the Hudson River in the Tarrytown, NY, area. In November, the largest bridge project reported as a construction start was a $125 million bridge reconstruction project in Fall River, Mass.
Additional public works categories with November declines were highway construction, down 3 percent; and sewers, down 32 percent. On the plus side, both river/harbor development and water supply construction showed improvement from a lackluster October, advancing 47 percent and 3 percent respectively.
The miscellaneous public works category, which includes such diverse project types as pipelines and mass transit, grew 8 percent in November with the help of the $300 million Keystone Pipeline Gulf Coast Expansion in Texas. Electric utility construction in November edged up 1 percent, staying basically unchanged from its sharply reduced amount in October. The largest electric utility project reported as a November start was a $400 million wind farm in the state of Washington.
For the January-November period of 2013, nonbuilding construction was down 15 percent from a year ago. After reaching a record high in current dollar terms back in 2012, the volume of new electric utility starts has fallen sharply in 2013, plunging 59 percent year-to-date. Running counter has been the public works sector, posting year-to-date growth at 5 percent. The largest increase was registered by bridge construction, up 41 percent, rejecting the start of several very large bridge projects over the course of 2013. The substantial yearto- date gain for bridge construction was accompanied by a 9 percent increase for highway construction, as noted above.
For environmental public works, year-to-date growth was reported for river/harbor development, up 25 percent; and water supply construction, up 10 percent; while sewer construction was unchanged from its 2012 amount. The miscellaneous public works category dropped 20 percent year-to-date, as the dollar amount of pipeline projects retreated from the strong pace witnessed during 2012.
Residential building in November improved 1 percent to $218.5 billion (annual rate). The upward push came from the multifamily side of the housing market, which climbed 18 percent. Large multifamily projects reported as November starts included a $450 million multifamily tower and the $126 million condominium portion of a $300 million condo hotel, both located in New York. Also reaching groundbreaking in November were a $114 million multifamily tower in San Francisco, a $100 million apartment complex in Huntington Station, NY, and a $100 million multifamily tower in Chicago.
Single-family housing in November receded 3 percent, pulling back after a 4 percent gain in October. The November pace for single-family housing was still 12 percent above what was reported at the outset of 2013. During the first 11 months of 2013, residential building advanced 25 percent compared to a year ago. Single family housing will come close to matching last year’s strong percentage gain (up 29 percent), reporting a 27 percent increase in this year’s January-November period.
By major region, single-family housing showed this year-to- date performance – the South Atlantic, up 35 percent; the Midwest, up 29 percent; the West and Northeast, each up 26 percent; and the South Central, up 19 percent. Multifamily housing year-to-date climbed 21 percent, a strong rate of increase although revealing some deceleration from the sharp rise (up 37 percent) reported for the full year 2012.
By major region, multifamily housing showed this yearto- date performance – the Northeast, up 43 percent; the Midwest, up 26 percent; the South Atlantic, up 22 percent; the West, up 11 percent; and the South Central, down 6 percent. The top five metropolitan areas in terms of the dollar amount of multifamily starts year-to-date were – New York, up 47 percent; Boston, up 87 percent; Washington DC, up 9 percent; Miami, up 5 percent; and Los Angeles, down 24 percent.
The 6 percent increase for total construction starts at the national level during the first 11 months of 2013 was supported by gains in three of the five major regions. Leading the way was the Northeast, up 21 percent; followed by the Midwest, up 11 percent; and the West, up 9 percent.
Total construction starts in the South Central region were unchanged year-to-date, while the South Atlantic showed a 3 percent decline. The South Atlantic shortfall rejected the comparison to the first 11 months of 2012 that included the start of two massive nuclear facilities. If electric utilities are removed from the year-to-date construction statistics in the South Atlantic, then total construction for that region in 2013 would be up 21 percent.