Dive Brief:
- Total construction starts ticked down 1% in March to a seasonally adjusted annual rate of $1.06 trillion, according to Dodge Construction Network.
- The drop marks two months of contraction in groundbreakings, largely due to lingering inflation and high interest rates.
- “The construction sector has hit a soft patch to start 2024,” said Richard Branch, chief economist for Dodge Construction Network. “However, this should not be overly surprising given high rates and restrictive credit.”
Dive Insight:
Positive takeaways from the report include single-family starts moving higher and federal dollars lifting nonbuilding starts, indicating some bright spots in the data.
But recent hot inflation readings likely mean that rate cuts will not happen until later in the year, which should cause commercial and multifamily sectors to continue to languish, said Branch.
Manufacturing, nonresidential tumble further
Nonresidential building starts dropped another 9% in March to a seasonally adjusted annual rate of $363 billion.
Manufacturing starts, the usual powerhouse in the category, led the drop, falling 58% in March. Commercial starts, which include retail, office and warehouse projects, ticked down 1% due to a pullback in office and hotel kickoffs, according to the report.
On the other hand, institutional starts, which include healthcare and education projects, moved up 4% in March, largely due to large healthcare projects currently underway, according to Dodge.
For the 12 months ending March 2024, nonresidential building starts remained 8% lower than the previous 12 months. During that 12 month span, manufacturing and commercial starts dropped 30% and 10% respectively, while institutional starts ticked up 7%.
The largest nonresidential building projects to break ground in March included:
- The $1.3 billion Rady Children’s Hospital Intensive Care Unit in San Diego, California.
- The $600 million Google data center in The Dalles, Oregon.
- A $532 million federal prison in Leavenworth, Kansas.
Nonbuilding bounces back
After a slight tick down in February, nonbuilding starts, which include highway, street, bridge, gas plants and environmental public works, posted a 7% rebound in March to a seasonally adjusted annual rate of $298 billion.
Gas plants more than doubled during the month of March, while highway and bridge starts gained 19%, according to the report. For the 12 months ending March 2024, total nonbuilding starts jumped 18% higher than the 12 months ending March 2023.
The largest nonbuilding projects to break ground in March included:
- The $1 billion Eland Solar and Battery Storage facility in Mojave, California.
- The $908 million SR 826 road and bridge project in Miami, Florida.
- The $650 million Serrano Solar and Storage project in Pima and Pinal counties in Arizona.
Residential building activity inches higher
Residential starts inched up 1% in March to a seasonally adjusted annual rate of $400 billion, according to Dodge.
Single-family starts jumped 9%, while multifamily starts tumbled down 14%. For the 12 months ending March 2024, residential starts remain unchanged from the previous 12 months. During this year span, single-family starts improved 4%, while multifamily starts dropped 7% lower.
The largest multifamily buildings to break ground in March included:
- The $385 million One Naples Ritz Carlton residences in Naples, Florida.
- The $261 million 100 North Main mixed-use project in Memphis, Tennessee.
- The $190 million The August at Steelpointe Harbor project in Bridgeport, Connecticut.
