A new report from Dodge Data & Analytics shows new construction starts in the commercial and multifamily sector down 5 percent nationwide.
Following a banner year in 2015 thanks to major projects in New York City, the first half of 2016 shows signs of leveling off under the previous year’s mark.
The biggest dollar amount change came in the form of less $500 million-plus projects starting in 2016. Last year, there were nine individual projects exceeding $500 million that totaled $7.6 billion. Three projects in NYC — two office buildings in the Hudson Yards development and the One Manhattan West office tower — took more than half the share of that $7.6 billion.
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“Several points can be made to put the moderate decline for first half 2016 commercial and multifamily construction starts at the U.S. level into the proper perspective,” Robert A. Murray, chief economist for Dodge Data & Analytics, said in a release. “First, the comparison is being made against the heightened levels that were reported during the first half of 2015, which were lifted by the start of several unusually large projects.”
This year, however, there have been only two new construction starts valued at $500 million, and neither of the two are in the Big Apple.
Who’s carrying the banner?
Both commercial and multifamily new construction starts were up 64 and 60 percent, respectively, when compared to 2015. Los Angeles broke ground on five multifamily projects valued over $100 million. The two highest priced projects were the $493 million multifamily part of the Century Plaza in Century City and the $275 million multifamily part of a mixed-use development in L.A.
A renovation of the Beverly Center valued over $500 million, and four other eight- and nine-figure commercial projects helped L.A. push total dollar amounts up 62 percent from the previous year.
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New starts in NYC were down 34 percent year-over-year, but that’s obvious given only three $500 million-plus projects started. With that said, commercial construction is down 43 percent, and new multifamily construction starts are down 26 percent annually. However, these numbers are still higher than new construction starts in 2014.
New construction dollar amounts by city per Dodge Data & Analytics
The largest multifamily construction start was a multifamily high-rise in Jersey City, New Jersey. This project is valued at $475 million.
“The level of construction starts in the New York-NY metropolitan area has recently been supported by luxury multifamily high-rises, the massive Hudson Yards development, foreign investment in New York City real estate, and the push during 2015 by developers to get multifamily projects started prior to the loss of the incentives under the 421-a program, which expired in January 2016,” Murray said in the same release.
The decline in dollar amounts for multifamily construction is deceiving, though. Dodge Data & Analytics reports that it has more to do with new projects being less costly, as new multifamily construction is only down 3 percent.
Chicago and D.C. rising
Despite the buyer’s market in Chicago (where 56 percent of homes sold below list price in May), new construction is way, way up in 2016, according to the report. Thanks to six, $100 million-plus multifamily projects, with the $500 million One Bennett Park high-rise leading the pack, Chicago’s multifamily construction starts are up 96 percent in terms of dollar amounts.
Commercial projects are down this year following the ground breaking of the $500 million 150 North Riverside office tower in 2015.
Miami’s skyline has been well-documented, both for the present and future. Multifamily was up 14 percent over 2015. The Paramount Tower at Miami World Center ($243 million) broke ground, as did the Armani/Casa Condominiums ($305 million). Another $116 million apartment complex started, also.
Multifamily housing in Washington D.C. experienced a 19 percent decline for the first half of the year. New construction for commercial projects was up 99 percent, but the most notable start in multifamily remained the $106 million hotel portion of the $230 million Columbia Place Hotel. CPH will also offer housing in the future.
“Metropolitan areas that had been slow to join the recovery process, such as Los Angeles, Chicago, San Francisco, Atlanta and Denver, are now seeing considerable gains in 2016 for commercial and multifamily construction starts,” Murray said. “Meanwhile, markets such as Miami, Washington D.C., Boston and Dallas-Fort Worth, which had been early participants in the recovery process, continue to see strengthening activity in 2016.”
