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 20 markets, 13 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 six percent from last year’s $107.4 billion.
The New York NY metropolitan area, at $15 billion, maintained its longstanding number one ranking by dollar volume, although it settled back eight percent 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 percent 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; Los Angeles CA; Atlanta GA; Chicago IL; and Austin TX.
The remaining markets in the top ten showing declines were Dallas-Ft. Worth TX; Miami FL; and Houston TX.
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 such as educational facilities, hospitals, convention centers, and transportation terminals) and manufacturing buildings.
At the U.S. level, the six percent 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 percent, 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,” said 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 eight decline registered by the New York NY metropolitan area during the first half of 2019 was the result of a 20 percent retreat for commercial building that was partially offset by a four percent gain for multifamily housing.
Office construction pulled back 43 percent when compared to the first half of 2018.
During the first half of 2019, the largest office project entered as a construction start was a $210 million office building on West 29th St. in Manhattan. Developed by HFZ Capital Group and designed by Bjarke Ingels Group, 3 West 29th Street in NoMad will rise to 34-stories and 551 ft. yielding 300,000 s/f of office space, glass walls and staggered outdoor terraces.
Hotel construction fell back 21 percent 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 six 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 percent with the largest project being a $182 million distribution center in the Bronx.
The four percent gain for multifamily housing during the first half of 2019 followed a four percent 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 the $200 million Bronx Point development in The Bronx.
