Dive Brief:
- Major U.S. metros saw a "substantial" increase in commercial and multifamily construction starts from 2015 to 2016, according to Dodge Data & Analytics.
- Dodge reported that 16 of the top 20 metros recorded double-digit, year-over-year gains in 2016 and that the country overall saw commercial and multifamily starts increase 7% to $186.3 billion. San Francisco saw the strongest growth in the sectors last year, followed by Atlanta, Boston and Los Angeles.
- Although there was broad growth across eight of the top 10 markets, Dodge Chief Economist Robert Murray said the pace of New York City's commercial and multifamily starts shrank 15% to $29.8 billion following a 2014-to-2015 increase of 67%. That 15% dip from new York last year was balanced out by the other metro areas' collective 33% bump in 2016.
Dive Insight:
Breaking down the national 7% increase, Dodge said that figure was driven by an 11% gain in commercial and a 3% boost to multifamily, a downward departure largely due to the 28% drop in multifamily starts in New York City. If New York City were taken out of the mix, overall multifamily starts for 2016 would have been up 13%. Murray said that 2016 also saw a weakening in the overall construction environment due to a slight increase in interest rates and stricter commercial and real estate lending practices.
In its 2017 outlook report released in October, Dodge predicted that 2017 multifamily starts would decrease by 2%, or 435,000 units, but in this most recent forecast, Murray suggested that the geographic widening of activity areas might indicate higher levels of multifamily starts similar to those in 2015 and 2016. In the same forecast report in October, Dodge said 2017 would likely see a 6% increase in commercial starts to $105 billion, which corresponds to the most recent prediction of continued moderate growth for that sector.