During the first six months of 2022, the value of commercial and multifamily construction starts in the top 20 metropolitan areas of the U.S. increased 24 percent compared to last year, according to Dodge Construction Network.
Nationally, commercial and multifamily construction starts increased 18 percent year-to-date. In the top 10 metro areas, commercial and multifamily starts rose 28 percent in the first six months of 2022 compared to that of 2021. Three metro areas, Seattle, Los Angeles, CA, and Philadelphia, posted a decline. In metro areas ranked 11 through 20, commercial and multifamily starts rose 16 percent on year-to-date through six months, although five metro areas, Boston, Chicago, Nashville, Minneapolis, and Kansas City, slipped from the first half of 2021.
Commercial and multifamily construction has made impressive gains in 2022, largely driven by rising demand for apartments and condos. A growing recovery in the commercial sector, however, has created more broad-based improvements across the country. These increases are even more considerable as the sector continues to combat rising prices, shortages of key materials and labor, and higher interest rates.
Where the highest increases were seen
The New York metropolitan area was the top market for commercial and multifamily starts during the first half of 2022 at $15.3 billion, an increase of 20 percent from the first half of 2021. The Dallas metropolitan area was in second place, totaling $8.1 billion in the first six months of 2022, a 72 percent year-to-date gain. The Washington, D.C., metro area ranked third during the first half of 2022 with $5.5 billion in starts, a 35 percent gain over 2021.
Read here for the full list of metropolitan areas.
Commercial and multifamily starts are comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing. Not included in this ranking are institutional projects, like educational facilities, hospitals, convention centers, casinos, transportation terminals, manufacturing buildings, single family housing, public works and electric utilities/gas plants.
In the first half of 2022, total U.S. commercial and multifamily building starts rose 18 percent from the first half of 2021 to $139.5 billion. Nationally, commercial starts climbed 14 percent year-to-date through six months to $70.0 billion, and multifamily starts gained 24 percent to $69.6 billion. Within the top 10 metro areas, commercial building starts rose 19 percent to $24.8 billion in the first six months of 2022, and multifamily starts gained 36 percent to $31.4 billion. Within the second-largest group of metropolitan areas, commercial building starts moved 19 percent higher through six months of 2022, and multifamily starts improved 13 percent.
“The construction sector is at a cross-roads,” says CEO of Dodge Construction Network Richard Branch. “The recovery from the pandemic morphed in 2022 by encompassing more sectors than just warehouses and single family housing despite rampant inflation in construction materials, a lack of key goods, and a stark shortage of skilled construction labor. Even though the level of projects currently in planning portends a bright second half to the year, the Federal Reserve’s fight against inflation has taken a toll on the economy and raised concerns that a recession could occur. As a result, construction starts are likely to move sideways over the second half of the year and potentially stall as the calendar shifts into 2023.”
