Home » Blog » GIO Looks at Non-Residential Construction Starts – 2017 1st Quarter Overview

GIO Looks at Non-Residential Construction Starts – 2017 1st Quarter Overview

construction site with cranes

Because GIO offers tile and stone products developed expressly for commercial design projects, we keep our eyes on coming and going design trends and materials preferences in the commercial sector. Economic barometers also play an important in role in how we prepare to supply and service our customers’ needs; that’s why we stay closely attuned to nonresidential and commercial construction starts and forecasts.

Here’s a look at what has transpired so far in 2017 on the nonresidential construction side.

January 2017 Construction Starts

In January, the value of new construction starts rose 12% to a seasonally adjusted annual rate of $690.2 billion. This figure is a 3%  decrease compared January a year ago, but it’s worth noting that the 2016 amounts included the often volatile manufacturing plant and electric utility/gas plant categories. If manufacturing plants and electric utilities/gas plants are excluded, total construction starts in January this year would be up 10% from January 2016.

Institutional Building

After losing momentum during last year’s fourth quarter, nonresidential building strengthened in January, climbing 16% to $261.5 billion, thanks in part to the inclusion of the $3.4 billion Central Terminal Building project at LaGuardia Airport. This increase created a 37% gain for the institutional categories as a group. The building of healthcare facilities advanced, rising 6% and the public buildings category rose 1%. On the down side of the, declines were reported for educational facilities (down 18%), amusement-related work (down 36%), and religious buildings (down 44%.).

Commercial Building

In January, the commercial side as a group of the nonresidential building market grew 12%. Within the group, office construction starts climbed 26%, and hotel construction rose 5%. On the negative side, some categories in the commercial group did not fare so well, with store construction declining 1% and commercial garages down by 7%. The manufacturing plant category in January plunged 69%. But in all fairness, the 69% plunge was relative to December, which included the start of a $1.2 billion pharmaceutical plant.

February 2017 Construction Starts

In February, new construction starts as a whole increased 2% from the previous month. Total construction starts on an unadjusted basis were $98.5 billion, down 4% from this month a year ago, but if we exclude manufacturing plants and electric utilities/gas plants, total construction starts during this year’s January-February period would be up 7% compared to last year.

Institutional Building

Nonresidential building starts dropped 9% in February to $238.5 billion (annual rate). Construction starts for the institutional categories as a group decreased 14%. Starts for the public buildings category (courthouses and detention facilities) retreated by 30%. On the positive side, the amusement and recreation category increased 101% due in part to the $562 million sports arena portion of the Chase Center project in San Francisco. Educational facilities construction starts improved 12% and healthcare facilities starts increased 4%.

Commercial Building

On the commercial side, nonresidential building starts fell 11% with office construction dropping 40% following the strong January performance, though February did include the start of several noteworthy office projects. Construction start for commercial garage declined 17%, and hotels were down 3%. On the plus side, warehouse starts increased 7%, stores were up 7%, and the manufacturing building category in February surged 147%  thanks to the start of a $985 million refinery modernization and a $100 million Mercedes Benz van manufacturing facility.

March 2017 Construction Starts

in March, new construction starts as a whole increased 5 percent to a seasonally adjusted annual rate of $743.7 billion, but nonresidential building remained unchanged from its February pace at $237.2 billion. But as a whole, nonresidential building starts held steady because strong activity for office buildings and airport terminals offset a steep drop for manufacturing plants.

Through the first three months of 2017, total construction starts on an unadjusted basis were $160.1 billion, down 3% from the same period a year ago (which included heightened activity for manufacturing plants and electric utilities/gas plants). If we  exclude manufacturing plant and electric utility/gas plant categories, total construction starts during the first three months of 2017 would be up 8% from last year.

Institutional Building

On the institutional side, construction starts for the nonresidential building market grew 3%, with much of that coming from an 83% increase for the transportation terminal category. Construction starts for religious buildings were up 9%, and public buildings (courthouses and detention centers) increased 4%. On the down side, educational facilities dropped 14% , although March did include the starts of some noteworthy educational facility projects.

Commercial Building

The nonresidential building market increased 7% on the commercial side, with office construction climbing 41% thanks to the start of five projects valued each in excess of $100 million. Commercial garages rose 12%, but on the negative side, construction starts for hotels declined 7%, stores and shopping center starts were down 8%,  and warehouse starts decreased 14%. Starts for manufacturing plants plunged 65%.

1st Quarter 2017 Construction Starts Summary

Compared to the same period last year, nonresidential building starts as a whole increased by 7%  in the first quarter of 2017, with institutional building starts up 35%, commercial building down 9%, and manufacturing building down 44%. Geographically, total construction starts in the first three months of 2017 showed reduced activity relative to last year in two regions. Construction starts in the South Central declined 26% and were down 3% in the Northeast. Total construction gains year-to-date were reported in the West (up 1%), the South Atlantic (up 11%), and the Midwest (up 12%).

Last 12 Months Construction Starts

To gain even better perspective, it helps to look at the past 12 months ending March 2017 compared to the 12 months ending March 2016. On this 12-month basis, total construction starts were up 2%. Nonresidential building as a whole increased 7%, with institutional building advancing 14%, commercial building increasing 7%, and manufacturing building decreasing 26%.

 

GIO: BUSINESS INTELLIGENCE, SOLUTIONS SAVVY

We consistently seek market data to best prepare and respond to the specific needs of the commercial architectural and interior design communities. Feel free to connect with your GIO sales representative for insights and ideas for taking your upcoming commercial building or renovation projects to the next level with superior tile selections.

Source: Dodge Data & Analytics

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