News

February Construction Starts Decline

0 203 Market Intelligence

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through February 2010, excluding residential contracts, totaled $43.8 billion, 12.4% more than in the same months of 2009. Individual month of February starts were 15.5% lower than in January.

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through February 2010, excluding residential contracts, totaled $43.8 billion, 12.4% more than in the same months of 2009. Individual month of February starts were 15.5% lower than in January. Both months suffered from unseasonably poor construction weather, but February’s weather was worse. The February decline is about twothirds due to the seasonal decline based on historical tracking, with possibly a few percentage points more due the unseasonably poor weather in this year’s period. Starts were about 6% higher in the latest month versus the same month a year ago.

The value of construction starts each month is summarized from RCD’s database of all active construction projects in the United States, excluding single-family homes. Missing project values are estimated using RSMeans’ building cost models.

The new data does not change the expected starts trend in 2010. The total value of starts is expected to be steady to slightly down in the next few months and then to begin rising slowly later in the year. February heavy project starts were the lowest in almost a year but essentially unchanged since January, after the usual seasonal adjustment. Nonetheless, this is encouraging since the month-to-month impact of the stimulus plan on heavy construction is ebbing. A small share of the February decline may be due to the several-day suspension of federal highway funding in February and the storm-related closing for several days of the federal office that releases funds.

February non-residential building starts fell slightly more than the usual seasonal decline. Excluding the nearly half-a-billion-dollar pickup in manufacturing starts after an unusually weak January, the non-residential starts total clearly weakened. Offices were an exception. Office starts jumped 29%, with the dollar gain equally divided between private and government offices.

Private office starts recorded a 16-month high. The surge in office starts is consistent with recent reports of better than expected trends in office occupancy and rental rates as well as office leasing trends. Education starts fell 30% back to the spring 2009 level. Possibly this fall was random, but it may also reflect the progressive negative impact of weakening state and local government budget positions.

Value of United States Construction Starts — February 2010
(Reed Construction Data)

  Jan-Feb
2010
(millions)
% Change
(Jan-Feb 10 vs
Jan-Feb 09)
  Jan-Feb
2010
(millions)
% Change
(Jan-Feb 10 vs
Jan-Feb 09)
Hotel/Motel $909 2.8%   Government Office $1,264 84.4%
Retail $2,088 -29.2%   Laboratory $481 77.3%
Parking Garage $158 -28.8%   Warehouse $248 -62.7%
Amusement $1,227 80.6%   Misc. Commercial $919 -49.2%
Private Office $2,712 1.3%  
COMMERCIAL $10,006 -7.7%

INDUSTRIAL (Manufacturing) $592 31.0%

Religious $358 -16.8%   Police/Courthouse/Prison $1,328 109.1%
Hospital/Clinic $2,694 -13.7%   Military $1,282 285.1%
Nursing/Assisted Living $470 -19.7%   School/College $8,160 14.0%
Library/Museum $479 -38.1%   Misc. Government $1,126 32.5%
INSTITUTIONAL $15,897 14.5%  

Misc. Non-residential $303 -40.4%
NON-RESIDENTIAL BUILDING $26,798 4.3%

Airport $352 198.4%   Dam/Marine $436 66.7%
Road/Highway $5,633 9.9%   Water/Sewage $5,872 99.7%
Bridge $1,998 15.1%   Misc. Civil $2,665 -12.7%
HEAVY ENGINEERING $16,956 28.1%

TOTAL NON-RESIDENTIAL $43,754 12.4%

Source: Reed Construction Data (RCD) and Property & Portfolio Research (PPR) (www.ppr.info).
Table: Reed Construction Data – CanaData.

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by Jim Haughey

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