- The value of construction starts surged 14% from August to a seasonally adjusted rate of $814.8 billion in September, according to Dodge Data & Analytics. The rebound was driven by the nonresidential sector, which spiked 37% month over month.
- Nonresidential benefited from three major starts last month — an ethane cracker plant in Pennsylvania ($6 billion); a new Delta terminal at LaGuardia Airport in New York City ($4 billion) and an office tower in the Hudson Yards development in Manhattan ($1.7 billion). A lethargic public works sector pushed nonbuilding down 3%, while residential — both single-family and multifamily — saw a modest gain of 1%.
- The Dodge Index rose to 172, its highest level yet in 2017, up from a reading of 151 in August. Dodge Chief Economist Robert Murray said this month's "spikes" in starts and the Index were indicative of the impact industry volatility has had on these metrics.
Large nonresidential projects like the new Delta terminal continue to influence starts data. The new terminal, which is in addition to the current Terminal B project LaGuardia Gateway Partners (LGP) has in progress, is part of the Port Authority of New York and New Jersey's efforts to modernize the airport. The LGP effort even gained a bit of star power in August when NBA legend Earvin "Magic" Johnson announced that he had become an investor in the project. Delta is footing most of the bill for its new terminal — $3.4 billion — and the Port Authority contributing the remaining $600 million.
Hudson Yards projects have also given a boost to nonresidential starts every time one of its major towers breaks ground. While 50 Hudson Yards made this month's Dodge report, it likely won't be long before The Spiral high-rise has its turn. Developer Tishman Speyer recently worked a $157 million deal that locked in the remaining air rights necessary for construction to move forward on the $3.2 billion, 65-story office building.
Tishman Speyer has forked over a total of $265 million for approximately 1 million square feet of air rights. This latest purchase from the Metropolitan Transportation Authority (MTA) resulted in the acquisition of 669,000 square feet.
The MTA continues to benefit financially from the Hudson Yards project. A little more than a year ago, the agency raised $1.06 billion by selling bonds backed by payments it receives from leasing the property. In addition to the bond sale, Hudson Yards is expected to generate $1.78 billion for the MTA from ground lease and air rights payments and then $89 million annually thereafter.