Nonresidential starts are now at their lowest level since 2015
Commercial and multifamily construction starts in the top 20 US metro areas fell to $111.1 billion in 2020, a freefall of about 23% in value, according to Dodge Data & Analytics. More broadly, national starts in those sectors took a 20% tumble to $193.4 billion. The total consists of office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing and does not include institutional building projects.
Among the largest US metros, New York City saw a 25% decline year-over-year but remained the largest market for commercial and multifamily starts at $23.5 billion. The Washington, D.C., metro suffered an identical decline, with starts at $8.9 billion, followed by Los Angeles, which fell 21% to $7.4 billion.
Nonresidential construction will likely remain in recession this year, after construction spending ended an epic run of expansion last spring. Total starts fell 10% to $766.3 billion in 2020, and nonresidential starts posted the lowest level since 2015, as GlobeSt previously reported.
“The pandemic is having a significant negative impact on commercial and multifamily construction across the country,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “While some areas stabilized over the summer, the current wave of the virus has further hindered activity. The recently passed $900 billion stimulus plan will go a long way towards re-energizing the economy.”
Branch predicts that the construction sector will show signs of recovery in 2021, but that it will be a difficult slog. “The effects of the pandemic on the US economy and building markets will be felt for several years,” he says.
Phoenix was the only top 20 metro reporting an increase in commercial and multifamily starts, gaining 32% to $5.3 billion following a 35% gain in 2019. Commercial building starts in the Valley of the Sun increased 20% in 2020, owing mostly to gains in warehouses, hotels, and parking structures. Denver and Kansas City were the sold standouts posting increases among secondary markets (those ranked 11 to 20 in terms of size), which lost a collective 23% as well over the course of the year.
Source: “Nonresidential Construction Likely to Remain in Recession This Year“