21 Aug Airo AV Declares First Half 2019 Commercial and Multifamily Construction Sta…
While New York Settles Back, Gains Still Reported for 6 of the Top 10 Markets
NEW YORK – August 21, 2019 – During the first half of 2019, six of the top ten U.S. metropolitan markets for commercial and multifamily construction starts ranked by dollar volume registered greater activity compared to a year ago, according to Dodge Data & Analytics. Of the top twenty markets, thirteen were able to register gains. At the U.S. level, the volume of commercial and multifamily construction starts during the first half of 2019 was $101.4 billion, down 6% from last year’s $107.4 billion.
The New York NY metropolitan area, at $15.0 billion, maintained its longstanding number one ranking by dollar volume, although it settled back 8% from a year ago. Several very large projects had boosted New York’s first half 2018 total, including the $1.8 billion Spiral office tower in Manhattan’s Hudson Yards district. The first half of 2019 also witnessed groundbreaking for several very large projects, such as the $1.1 billion TSX Broadway Hotel project in Times Square, yet this year’s lift from very large projects was slightly less than what took place during 2018.
The Washington DC metropolitan area, at $7.1 billion, was ranked number two in terms of the dollar amount of commercial and multifamily construction starts during the first half of 2019. Soaring 50% compared to a year ago, the Washington DC market showed the volume of office construction starts doubling in size relative to last year. Providing the boost was the $610 million Reston/Gateway office/retail development in Reston VA and large data center projects led by the $300 million CloudHQ facility in Ashburn VA. The Washington DC metropolitan area had $1.2 billion reported for new data center starts during the first half of 2019, the most of any U.S. metropolitan area.
Of the remaining markets in the top ten, the metropolitan areas showing growth during the first half of 2019 versus a year ago were – Boston MA ($3.8 billion), up 2%; Los Angeles CA ($3.8 billion), up 14%; Atlanta GA ($3.4 billion), up 69%; Chicago IL ($3.0 billion), up 0.4%; and Austin TX ($2.6 billion), up 39%. The remaining markets in the top ten showing declines were – Dallas-Ft. Worth TX ($3.4 billion), down 7%; Miami FL ($3.1 billion), down 38%; and Houston TX ($2.5 billion), down 4%.
For the metropolitan areas ranked 11 through 20, the seven that registered first half 2019 gains were – Philadelphia PA ($2.5 billion), up 34%; Nashville TN ($2.2 billion), up 112%; Minneapolis MN ($1.8 billion), up 28%; Orlando FL ($1.8 billion), up 8%; Portland OR ($1.4 billion), up 22%; Cincinnati OH ($1.4 billion), up 130%; and Columbus OH ($1.2 billion), up 20%. The three metropolitan areas reporting declines in markets ranked 11 through 20 were – San Francisco CA ($2.1 billion), down 24%; Phoenix AZ ($1.5 billion), down 5%; and Seattle WA ($1.5 billion), down 57%.
The commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing. Not included in this ranking are institutional building projects (e.g,, educational facilities, hospitals, convention centers, and transportation terminals) and manufacturing buildings. At the U.S. level, the 6% decline for commercial and multifamily construction starts in the first half of 2019 was due entirely to a slower pace for multifamily housing, which dropped 13%, while commercial building held steady with its first half 2018 amount.
“So far in 2019, multifamily housing has settled back from last year’s robust amount, although this year’s volume can still be regarded as healthy by recent standards,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “Due to the strong 2018 economy, market fundamentals for multifamily housing such as occupancies and rents strengthened, and have not yet begun to erode in a widespread manner. At the same time, there are concerns that multifamily housing is overbuilt in some markets, and the banking sector continues to take a cautious stance towards multifamily lending. As for commercial building, office construction starts in 2019 have seen modest expansion compared to last year, helped by groundbreaking for large office projects and the support coming from the continued strength of data center projects. Hotel construction has stayed close to last year’s pace, but warehouse construction has begun to slip and store construction has seen further declines. Going forward, a slowing economy would lead to more visible erosion in market fundamentals, which would contribute to a more subdued pace for commercial building starts.”
The 8% decline registered by the New York NY metropolitan area during the first half of 2019 was the result of a 20% retreat for commercial building that was partially offset by a 4% gain for multifamily housing. Office construction pulled back 43% when compared to the first half of 2018 that included the $1.8 billion Spiral office tower and the $480 million addition to the Hudson Commons office building, both in or near the Hudson Yards district of Manhattan, plus the $300 million One Willoughby Square building in Brooklyn. During the first half of 2019, the largest office project entered as a construction start was a $210 million office building on W. 29th St. in Manhattan. Hotel construction fell back 21% in the first half of 2019, even with the start of the $1.1 billion TSX Broadway Hotel which involves the renovation of the Palace Theater in Times Square. The first half of 2018 had included the start of 6 hotel projects valued each at $100 million or more, led by the $300 million Tribeach Holdings Hotel in Times Square. Warehouse construction was able to post a first half 2019 gain relative to a year ago, rising 86% with the largest project being a $182 million distribution center in the Bronx. The 4% gain for multifamily housing during the first half of 2019 followed a 4% increase for the full year 2018, as multifamily projects continue to move forward at a healthy pace. There were 38 multifamily projects valued each at $50 million or more that were entered as construction starts during the first half of 2019, led by the $700 million Hunters Point South multifamily complex (phase 2) in Long Island City, the $640 million Pacific Park apartment building in Brooklyn, and a $200 million apartment building in the Bronx.
The 50% jump for the Washington DC metropolitan area during the first half of 2019 reflected a 96% surge for new commercial building starts combined with a 7% gain for multifamily housing. Office construction climbed 102%, pushed upward by groundbreaking for the $610 million Reston/Gateway office/retail development in Reston VA, the $300 million Avocet Tower in Bethesda MD, and the $188 million Capital One office building in Fairfax VA. A strong dollar amount of data center starts, valued at $1.2 billion during the first half of 2019, also boosted the office total for the Washington DC market. The largest data center projects entered as construction starts included two in Ashburn VA, the $300 million CloudHQ data center and the $135 million RagingWire data center, plus two in Manassas VA valued respectively at $258 million and $135 million. Gains were also reported during the first half of 2019 for stores, warehouses, hotels, and commercial garages, relative to subdued activity for these four structure types during the same period a year ago. The 7% increase for multifamily housing during the first half of 2019 followed a 27% hike for the full year 2018. The largest multifamily projects that reached groundbreaking during the first half of 2019 were the $207 million multifamily portion of the $250 million Eckington Yards/Flower Center mixed-use complex in Washington DC and the $144 million multifamily portion of the $240 million Hoffman Town Center mixed-use building in Alexandria VA.
The Boston MA metropolitan area registered a 2% gain for commercial and multifamily starts during the first half of 2019, with commercial building up 72% while multifamily housing dropped 41%. The commercial building segment was lifted by a 109% rise for new office building starts that included three large projects in Boston – the $300 million One Post Office Square addition/renovation, the $225 million Amazon at Seaport Square building, and the $170 million Boston Garden Office Tower (phase 3). Large office projects also reached groundbreaking in Cambridge ($155 million for the office portion of a $362 million office/research lab complex), Somerville ($125 million), and Lexington ($76 million for the office portion of a $200 million office/research lab complex). Hotel construction increased 212% from a weak amount a year ago, helped by the start of a $34 million Staybridge Suites hotel in Revere. Store construction improved 2%, while warehouse construction fell 11%. The 41% decline for multifamily housing in the first half of 2019 followed strong activity during 2018, when multifamily housing soared 73% for the full year. There were four multifamily projects valued each at $50 million or more that reached groundbreaking during the first half of 2019, led by the $141 million multifamily portion of the $225 million Red Line Station mixed-use complex in Quincy.
Commercial and multifamily construction starts in the Los Angeles CA metropolitan area advanced 14% during the first half of 2019, with multifamily housing up 21% while commercial building grew 8%. The 21% gain for multifamily housing followed a 7% slide for the full year 2018, with much of this year’s boost coming from the $511 million multifamily portion of the $950 million Grand Avenue mixed-use complex in Los Angeles. Other large multifamily projects that reached groundbreaking during the first half of 2019 included the $300 million 2900 Wilshire Blvd. Apartments and the $150 million multifamily portion of the $185 million JMB Century City high-rise tower,…