The latest report from the Dodge Construction Network (DCN) highlights a mix of trends in the construction industry during May 2023.
While the overall construction starts saw a 10% increase, driven by significant gains in the nonbuilding sector, the nonresidential and residential segments displayed contrasting performances.
Nonresidential building starts declined by 2% in May, with manufacturing starts dropping by 14% and institutional starts decreasing by 6%. However, the commercial sector witnessed a 10% increase, buoyed by gains in warehouse, office, and parking projects. On a year-to-date basis, total nonresidential starts were up 3%, with institutional starts leading the charge with a 20% increase, while commercial and manufacturing starts were down 5% and 19%, respectively.
The residential sector also experienced a decline, with a 7% drop in overall starts. While single-family starts rose by 2%, the multi-family segment saw a significant 25% decrease. On a year-to-date basis, total residential starts were 16% higher, with single-family starts improving by 29% and multi-family starts decreasing by 5%.
“Even though May’s gain in construction starts was mainly due to a handful of large projects, the data highlights that there is some grassroots demand building in the market,” says DCN chief economist Richard Branch. “Single-family starts, in particular, have risen in eight of the last 12 months despite high mortgage rates. Growth in single-family will incentivize further demand for retail, health, and education starts, among others, and the stability in the Dodge Momentum Index.”
The largest nonresidential projects to break ground in May included the $2.1 billion Tennessee Titans Football Stadium in Nashville, the $1 billion Gotion EV Battery plant in Manteno, Illinois, and the $875 million General Motors Battery Cell factory in New Carlisle, Indiana. In the residential sector, the notable projects were the $200 million The Atlantic Club in Long Branch, New Jersey, the $150 million mixed-use project at 880 Atlantic Avenue in Prospect Heights, New York, and the $150 million Tuscany at Gabriella Pointe in Gilbert, Arizona.
Regionally, the construction sector saw a mixed performance, with total starts rising in the Midwest and the South, while declining in the Northeast and West.
As the construction industry navigates the challenges and opportunities of the current market, it will be crucial for industry stakeholders to closely monitor these trends and adjust their strategies accordingly to capitalize on the evolving landscape.
Source:Dodge Construction Network with additional information added by GlassBalkan
