Dive Brief:
- Total construction starts surged 20% in December to a seasonally adjusted annual rate of $1.12 trillion after three months of falling activity in September, October and November, according to Dodge Construction Network.
- Despite the big bounceback during the last month of the year, total construction activity remained 4% lower compared to 2022, according to the report.
- “Construction starts ended the year on a positive note,” said Richard Branch, chief economist for Dodge Construction Network. “The planning queue is stabilizing, and the promise of lower rates should spur construction onward. While hurdles remain, including scarce labor and tight credit, 2024 should be a more positive year for the construction sector.”
Dive Insight:
2024 provides promise that positive momentum will continue to build, largely due to the expectation of lower interest rates, said Branch.
The American Institute of Architects’ Architecture Billings Index, which tracks architectural design activity, also showed some positive signs, with fewer firms reporting a decline in billings. The ABI is a leading indicator of construction activity nine to 12 months out.
Among one of the favorites for heightened activity this year, manufacturing construction starts rebounded 75% in December.
The subsector, composed of electric vehicle battery factories and semiconductor fabrication plants, helped boost overall nonresidential building starts by 37% in December to a seasonally adjusted annual rate of $479 billion, according to the report.
Meanwhile, commercial starts, which include retail, office and warehouse projects, increased 48%, with all subcategories posting sizable growth, according to the report.
Institutional starts, which consist of healthcare and education projects, gained 22% in December, largely due to growth in education, public building and recreation construction. Only healthcare-related construction posted a decline in December, according to Dodge.
The largest nonresidential building projects to break ground in December included:
- The $2.7 billion Texas Instruments fabrication plant in Sherman, Texas.
- The $1.1 billion OxyChem Project Orca in La Porte, Texas.
- The $815 million University of Chicago Cancer Center in Chicago.
Nonbuilding starts show resurgence
After a 32% drop in October and another 2% drop in November, nonbuilding starts finally posted a bounceback during the last month of 2023. The sector, which includes highway, street, bridge, gas plants and environmental public works, jumped 13% in December to a seasonally adjusted annual rate of $253 billion, according to the report.
Every one of those subcategories posted gains in activity. Highway and bridge projects improved 12%, gas plants rose 15% and environmental public works increased 8%. For the full 2023 year, nonbuilding starts jumped 16%, according to Dodge.
The largest nonbuilding projects to break ground in December included:
- The $1.3 billion Faraday Solar project in Elberta, Utah.
- The $425 million San Juan 1 solar farm in Farmington, New Mexico.
- The $300 million renovation of the David Booth Kansas Memorial Stadium in Lawrence, Kansas.
Multifamily construction closes year on growth
Residential building activity jumped 8% in December to a seasonally adjusted annual rate of $391 billion.
Multifamily starts led the way, with a 22% jump in activity, followed by single family residential’s 1% growth in December.
In 2023, total residential construction dropped 13%, with single-family and multifamily losing 13% and 12% in activity, respectively.
The largest multifamily structures to break ground in December included:
- The $430 million Auberge South Beach Condo project in Miami Beach, Florida.
- The $325 million 2600 Biscayne mixed-use project in Miami.
- The $300 million mixed-use project at 55 Hudson St. in Jersey City, New Jersey.
