U.S. Metropolitan Areas Show Little Growth in Commercial and Multifamily Starts

Dodge Data & Analytics
February 26, 2018

Activity in many leading U.S. metropolitan areas for commercial and multifamily construction starts slowed in 2017 compared to levels reported during 2016, according to Dodge Data & Analytics. At the national level, the volume of commercial and multifamily construction starts was $194.7 billion, down 7 percent from 2016, although still 8 percent above the amount reported for 2015.

New York City continued to be the leading market for commercial and multifamily construction starts, but it dropped 16 percent from its 2016 amount. The other six metropolitan areas in the 2017 top ten with declines from their 2016 amounts were Los Angeles; Dallas-Ft. Worth; Washington, D.C.; Miami; Chicago; and Boston. Seattle's activity growth held steady in 2017, while San Francisco and Atlanta reported gains. 

The 7 percent drop for commercial and multifamily construction starts in 2017 reflected mostly a multifamily pullback, according to Dodge. Multifamily construction starts at the U.S. level in 2017 dropped 12 percent, which followed a 10 percent increase in 2016. Commercial building construction starts in 2017 slipped 3 percent.

“Of the commercial and multifamily project types, multifamily housing is the one that appears to have already reached its peak and is now heading downward, as shown by the 12 percent decline in dollar terms during 2017,” says Robert A. Murray, chief economist for Dodge Data & Analytics.

“The picture for commercial building is mixed, as both office buildings and warehouses seem to still be in the process of reaching a peak,” Murray says. “Although downtown and suburban office vacancy rates edged up slightly in the fourth quarter of 2017, they remain low by recent standards. At the same time, hotel construction starts are easing back, particularly from 2016 which saw several very large hotel and casino projects reach the construction start stage. As for store construction, its 10 percent retreat in dollar terms at the national level during 2017 is consistent with its weak performance in the overall expansion for commercial building to date.”