Construction starts moved 37 percent higher from October to November, reaching a seasonally adjusted annual rate of $988.9 billion, according to Dodge Data & Analytics. The large percentage gain was not only a response to a particularly weak October, but also numerous massive projects that broke ground during the month. By major sector, nonresidential building starts gained 61 percent over the month, while non-building starts moved 82 percent higher. Residential building starts were flat from October to November.
November’s gain pushed the Dodge Index to 209 (2000=100) compared to the 153 posted in October. The dichotomy between the weakness in October and strength in November is startling. However, the average of the two months is 181 – not much higher than the 11-month average of 173.
“The presence or absence of large projects continues to add immense volatility to the monthly data,” states Richard Branch, chief economist of Dodge Data and Analytics. “However, the underlying trend for the year remains intact – that construction starts are settling back following nine consistent years of growth.”
Non-building construction increased 82 percent in November to a seasonally adjusted annual rate of $288.5 billion. Starts in the electric utility/gas plant led the way due to the start of a large LNG plant as well as several wind power projects. When removing the large gain in utility projects, non-building starts rose 9 percent. Environmental public works starts (drinking water, sewers, hazardous waste, and other water resource projects) moved 51 percent higher over the month, while highway and bridge starts rose 18 percent. Miscellaneous non-building starts, by contrast, fell 33 percent in November.
The largest non-building construction project to break ground in November was the $4.0 billion first phase of the Golden Pass LNG facility in Sabine Pass, Texas. Also starting in November was the $743 million Cheyenne Ridge Wind Farm in Cheyenne Wells, Colo., and the $650 million High Prairie Wind Farm in Greentop, Mo.
Through the first eleven months of 2019, non-building construction was 6 percent higher than in the same period of 2018. The electric utility/gas plant category was 111 percent higher than a year earlier. When removing that category from total non-building, starts were down 9 percent year-to-date. Environmental public works gained 2 percent over the year, while miscellaneous non-building dropped 19 percent. Highway and bridge starts were 8 percent lower on a year-to-date basis.
Nonresidential building gained 61 percent from October to November to $366.5 billion (at a seasonally adjusted annual rate), as several large projects got underway during the month. Manufacturing starts rose 782 percent over the month due to the start of a large petrochemical plant, while institutional starts rose 27 percent and commercial starts moved 23 percent higher. Only two nonresidential building categories fell in November; hotels and healthcare.
The largest nonresidential building project to break ground in November was a $7.0 billion ExxonMobil petrochemical ethylene project in Gregory, Texas. Also starting in November was the Rancho Los Amigos South Campus $330 million office building in Los Angeles, as well as the $296 million first phase of the Volkswagen Body Shop in Chattanooga, Tenn.
Year-to-date through November, nonresidential building starts were 3 percent lower than a year earlier. Commercial building starts were up 3 percent with gains in office buildings, warehouses, and parking structures. Institutional starts were 6 percent lower through November with all major categories posting declines and manufacturing starts were down 15 percent through 11 months.
Residential building starts in November were essentially flat when compared to the previous month at a seasonally adjusted annual rate of $333.9 billion. Over the month, single family starts dropped 8 percent, off-setting a 20 percent gain in multifamily starts. The largest multifamily building to break ground was the $500 million Calyer Place Apartment Development in Brooklyn, N.Y. Also starting in November was the $350 million Seattle House Mixed-Use Development in Seattle, and the $350 million Avenue Bellevue Mixed-Use Development in Bellevue, Wash.
On a year-to-date basis through eleven months, total residential buildings starts were down 4 percent. Single family starts were 2 percent lower, while multifamily starts declined 10 percent.