The “miscellaneous” public works category, which includes mass transit, advanced 32% in July with support coming from the start of the $328-million Oakland Airport Connector project in California, and river/harbor development bounced back 29% after a subdued June. Two public works categories lost momentum in July – sewers, down 2%; and water supply systems, down 20%.
Nonresidential Building,
Nonresidential building, at $144.5 billion (annual rate), dropped 6% in July due partly to the commercial building sector retreating after its improved performance in June. The retail categories in July continued to languish, with stores down 9% and warehouses down 10%. Office construction in June had been aided by the start of several large projects, including a $200-million office campus in the Houston area, but with fewer large projects in July, office construction descended 9%.
The largest office project to reach groundbreaking in July was $110 million for the office portion of a $350-million pharmaceutical laboratory and office in Boston. Hotel construction in July was down 32% from the previous month. Running counter to the declines for commercial building in July was a substantial gain for the manufacturing building category, which jumped 190%. Large projects that lifted the July manufacturing amount were groundbreaking for a $1.5-billion semiconductor plant in Chandler, Ariz., and the $225-million laboratory portion of the $350-million pharmaceutical laboratory and office in Boston.
The institutional side of the nonresidential market showed a mixed performance by project type. Health-care facilities dropped 55% in July after elevated activity in the previous two months. Other July declines were reported for amusement-related projects, down 45%; and the public buildings category, down 21%. On the plus side, the educational building category climbed 12%, helped by a $300-million construction project at the Whitney Museum of American Art in New York City. July also included the start of major high school construction projects, with the four largest located in Arlington, Va. ($88 million), Chicago ($87 million), Merced, Calif. ($76 million), and Methuen, Mass. ($75 million). Two of the smaller institutional categories posted strong percentage gains in July after a very weak June—transportation terminals, up 44%; and churches, up 48%; although the levels for both of these project types remain weak by recent historical standards.
Residential Building
Residential building in July grew 3% to $124 billion (annual rate). Like the previous month, the upward push in July for residential building came from multifamily housing, which climbed 19%. Large multifamily projects that supported the July gain included a $242-million apartment building in Long Island City, N.Y., and a total of 13 multifamily projects (mostly apartment buildings), each with a construction start cost in the range of $25 million to $55 million. The single-family side of the housing market slipped 1% in July, as it continues to remain on hold at a depressed amount. July’s single-family total showed gains in the West (up 6%) and South Atlantic (up 1%) relative to June but declines in the South Central (down 3%), the Midwest (down 5%), and the Northeast (down 6%).
Murray said, “To this point, the only housing recovery has been on the multifamily side of the market. Single-family housing continues to be weighed down by foreclosures, falling home prices, and the hesitation shown by potential homebuyers amidst uncertain economic conditions.”
The 6% decline for total construction starts on an unadjusted basis during the first seven months of 2011 was the result of decreased activity across the three major sectors. Nonresidential building was down 9% year-to-date, due to this pattern by segment—commercial building, up 2%; manufacturing building, up 143%; and institutional building, down 20%. Residential building year-to-date dropped 8%, while nonbuilding construction slipped 2%.
By geography, total construction starts during the first seven months of 2011 compared to last year showed a gain for one region, the West, up 10%. Year-to-date declines were reported for the other four regions—the South Central, down 9%; the South Atlantic, down 10%; and the Midwest and Northeast, each down 12%.