Infrastructure, utility construction expected to drive 2018 starts

Dive Brief:

Total U.S. construction starts grew by 8.6% year-over-year in Q3, marking the industry's third consecutive positive quarter, according to ConstructConnect's Q4 2017 Forecast Quarterly Report. The organization has also increased the starts forecast to 7.9% for 2017, a significant increase from the Q3 projection of 4.5%.
ConstructConnect said the residential sector will be the primary driver behind starts growth, but civil engineering should also be a high performer as well. Both categories saw gains in the third quarter, with civil engineering (+21.2% year-over-year) benefiting from several large projects and residential (+10.9% year-over-year) reacting to the pent-up demand for housing.
Total 2018 starts are expected to increase 4.8%, with residential (6.7%), nonresidential (1.9%) and heavy/civil engineering (6.6%) all in the positive. According to a Building Design + Construction analysis, single-family residential (8.8%), warehouses (4.7%), nursing homes (5.9%), educational facilities (4.2%), roads (5.9%), bridges (10.2%) and power, oil and gas (13.8%) should do particularly well in 2018.

Dive Insight:

The huge price tag of many utility projects can beef up starts reports, especially in the civil engineering category. In fact, the $10 billion ExxonMobil ethane steam cracker plant in San Patricio County, TX, helped add to that category in this latest ConstructConnect report. The project is a joint venture between ExxonMobil and Saudi Arabia-based Sabic, and has already aided the area's economy with the award of 12 contracts, so far, to local businesses.

Shell Chemicals is also underway with a $6 billion ethane cracker plant in Potter Township, PA. In addition to the cracker plant itself, Shell is building a 250-megawatt natural gas-fired power plant, a cooling tower, loading facilities, a water-treatment plant, a laboratory and an office building. The project is expected to employ 6,000 construction workers when building is in full swing.

Pennsylvania gave Shell a 25-year, $1.65 billion tax credit to build its cracker plant there, according to NPR. In the deal, Shell received a 15-year tax amnesty, with the state giving Shell a $2.10 tax credit for every gallon of ethane it buys from Pennsylvania natural gas drillers.

Infrastructure, too, is expected to drive a notable portion of 2018's construction starts. As the nation's public works grow increasingly strained, many states are readying to begin large-scale infrastructure revamps. Next year, too, could potentially see more details about the Trump administration's $1 trillion infrastructure plan.