The nonresidential building sector helped propel the number of total construction starts in March to a three-month high, announced Dodge Construction Network (DCN). The organization’s monthly construction indicator reports a 19% rise in total construction starts in March. This follows a 6% increase in February and a 27% decline in January.
In March, nonresidential starts rose 33% and residential starts moved 5% higher, says Richard Branch, DCN’s chief economist.
However, he adds that “construction starts have yet to see the impact of tightening financial conditions in the wake of the failure of Silicon Valley and Signature Banks … Construction starts began the year with gusto, but that is likely to erode as the year progresses, as seen by the declining trend in the Dodge Momentum Index, which tracks projects entering the earliest stages of planning.”
Year-to-Year Total Construction Starts
Total construction starts were 9% below that of 2022 in quarter one of 2023. Year-to-date, residential starts were down 29%, and nonresidential grew 6%. For the 12 months ending March 2023, total construction starts were 11% higher than the 12 months ending March 2022. Nonresidential starts were 33% higher, while residential starts lost 11%.
Nonresidential Building Starts
The sector increased to a seasonally adjusted annual rate of $492 billion. Thanks to several large project starts, manufacturing starts more than doubled over the month. Commercial starts rose 28%, with retail as the only category to fall, while institutional starts improved by 11% due to numerous healthcare projects getting underway. Through three months, year-to-date total nonresidential starts were 6% higher than in the first three months of 2022. Institutional starts gained 21%, manufacturing starts were 1% higher and commercial starts were down 5%.
For the 12 months ending March 2023, total nonresidential building starts were 33% higher than the 12 months ending March 2022. Manufacturing starts were 122% higher, institutional starts improved by 22% and commercial starts gained 18%.
The largest nonresidential building projects to break ground in March were the $5.5 billion Hyundai EV plant in Ellabell, Ga., the $3 billion Panasonic Energy North America Battery Manufacturing Plant, and the $780 million third phase of the BASF MDI chemical plant in Geismar, La.
Residential Building Starts
Residential building starts increased in March to a seasonally adjusted annual rate of $335 billion. Single-family starts rose by 4%, and multifamily starts increased by 8%. On a year-to-date basis through three months, total residential starts were down 29%, single-family starts were 37% lower and multifamily starts were down 12%.
For the 12 months ending in March 2023, residential starts were 11% lower than the 12 months ending in March 2022. Single-family starts were 23% lower, while multifamily starts were up 16% on a rolling 12-month basis.
The largest multifamily structures to break ground in March were a $400 million mixed-use project in Jamaica, N.Y., the $225 million Chestnut Commons Affordable Housing project in Cypress Hills, N.Y., and the $268 million Knox mixed-use development in Dallas.