Dodge Data & Analytics (DD&A) says only three of the top 20 metropolitan areas posted gains for the year as the COVID pandemic weighed down construction starts.
It should be of little surprise to learn that commercial and multifamily construction starts fell sharply in 2020 in the face of pressures from the pandemic. According to Richard Branch, chief economist, DD&A, the pandemic has had and will continue to produce a significant negative impact on this market segment across the country.
In its latest findings, DD&A indicates the value of commercial and multifamily construction starts in the top 20 metropolitan areas of the U.S. declined 23 percent in 2020, falling to $111.1 billion.
Its commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing. Not included are institutional building projects, manufacturing buildings, single-family housing, public works and electric utilities/gas plants.
Nationally, commercial and multifamily construction starts declined 20 percent for the year to $193.4 billion from the $240.3 billion posted in 2019. Multifamily building activity slid 11 percent lower to $89.5 billion.
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The top 10 metropolitan areas accounted for 41 percent of all U.S. commercial and multifamily construction starts in 2020, down from a 43 percent share in 2019. Commercial and multifamily construction starts in these areas fell 23 percent for the year with only one metro area reporting an increase. Multifamily building activity fell 21 percent.
The New York metropolitan area continued to be the largest market for starts at $23.5 billion despite suffering a stark 25 percent decline from 2019. Houston suffered the biggest dip, sliding a staggering 47 percent to $4.5 billion. Phoenix, Ariz., posted a 32 percent gain, climbing to $5.3 billion.
Metro areas filling out the rest of the top 20 accounted for 17 percent of total U.S. commercial and multifamily activity in 2020, the same share as in the previous year.
However, these areas also saw a 23 percent shortfall from 2019. Multifamily building starts lost 15 percent.
Of these areas, Atlanta, Ga. (-41 percent to $4.3 billion), San Francisco, Calif. (-46 percent to $2.4 billion) and Minneapolis, Minn. (-42 percent to $2.4 billion) experienced the biggest declines in 2020. Only Denver, Colo. (+17 percent to $3.3 billion), and Kansas City, Mo. (+20 percent to $2.5 billion) posted increases for the year.
The pain felt in most parts of the country will not ease quickly. “While some areas stabilized over the summer, the current wave of the virus has further hindered activity,” Branch stated.
While the recently passed $900 billion stimulus plan will go a long way toward re-energizing the economy, it’s not a complete panacea. “The construction sector will show signs of recovery in 2021, but the road back to full recovery will be long and difficult. The effects of the pandemic on the U.S. economy and building markets will be felt for several years.”
Source Becky Schultz, Equipment Today