New York, N.Y. – December 16, 2009 – At a seasonally adjusted annual rate of $405.0 billion, new construction starts in November dropped 9 percent from the previous month, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Nonresidential building retreated after October’s elevated activity, and nonbuilding construction (public works and electric utilities) also settled back. Meanwhile, residential building in November held steady with its October pace. Through the first eleven months of 2009, total construction on an unadjusted basis came in at $381.0 billion, down 28 percent from the same period a year ago.
“November’s pullback following the strong gain in October is a continuation of [the up-and-down ] pattern,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “Accordingly, even with the November decline, the evidence of recent months suggests that overall construction activity has at least stabilized at a low level. Single family housing is no longer exerting a downward pull, and the federal stimulus act to this point has supported greater construction of highways, bridges, river/harbor development, and courthouses. At the same time, the negatives of weak employment, tight bank lending, and diminished state fiscal health continue to depress most of the nonresidential building structure types as well as multifamily housing.”
Nonresidential building in November fell 18 percent to $146.1 billion (annual rate). The manufacturing plant category in November plunged 85 percent from its exceptional volume in October, which reflected the start of a $1.1 billion oil refinery expansion in Illinois. The commercial sector in November revealed further weakness for these structure types – stores, down 17 percent; warehouses, down 22 percent; and hotels, down 34 percent. The office category in November was able to register a 3 percent gain, lifted by the $747 million renovation of the United Nations Secretariat Building in New York NY. Without this very large project, the office category in November would have fallen 44 percent from its October amount, which featured groundbreaking for three office projects valued each in excess of $100 million.
The institutional sector in November was dampened by reduced activity for healthcare facilities, down 20 percent; dormitories, down 41 percent; and amusement-related projects, down 57 percent. While losing momentum, the healthcare facilities category in November did include the start of these large projects – a $150 million medical center expansion in Winchester VA, the $132 million clinic portion of a $250 million health science complex in Los Angeles CA, and a $100 million critical care facility in Paterson NJ. On the plus side, the institutional sector in November showed a 6 percent increase for educational buildings, helped by a $132 million community college complex in New Haven CT. The public buildings category in November edged up 1 percent, supported by groundbreaking for a $117 million courthouse in Staten Island NY. Also showing November gains were churches, up 3 percent; and transportation terminals, up 21 percent.
For the first eleven months of 2009, nonresidential building was down 34 percent from the same period a year ago. The commercial sector fell 48 percent, as the result of these year-to-date declines – offices, down 39 percent; stores, down 44 percent; warehouses, down 63 percent; and hotels, down 66 percent. The manufacturing plant category in the January-November period plummeted 67 percent. The institutional sector showed a comparatively mild 16 percent downturn in this year’s first eleven months, with weaker activity for educational buildings, down 19 percent; and healthcare facilities, down 34 percent. Two institutional structure types were able to register year-to-date gains – public buildings, up 14 percent; and transportation terminals, up 38 percent.
Nonbuilding construction, at $131.3 billion (annual rate) in November, dropped 7 percent from October. The most pronounced decline for the month was electric utility construction, which retreated 37 percent after October’s heightened amount. Even with this downturn, the electric utility category did have several large projects entered as November starts, including a $700 million natural gas power plant in New York and a $400 million wind farm in Texas. The public works categories in November showed a mixed performance. Highway construction settled back 11 percent after its 12 percent gain in October, and decreased contracting was also reported for water supply systems, down 8 percent; and miscellaneous public works (site work and mass transit), down 26 percent. In contrast, river/harbor development jumped 46 percent in November, with much of the lift coming from more hurricane reconstruction efforts in the New Orleans LA area. Bridge construction climbed 33 percent, helped by large projects in Washington DC ($156 million), New York ($140 million), and California ($106 million). Sewer construction grew 14 percent, boosted by a $192 million waste treatment facility in New York.
During the January-November period of 2009, nonbuilding construction was 12 percent below the same period a year ago. Electric utility construction dropped 47 percent from its record pace in 2008. Year-to-date declines were also shown by sewer construction, down 22 percent; water supply systems, down 20 percent; and miscellaneous public works, down 8 percent. Year-to-date increases were reported for highways, up 5 percent; and bridges, up 8 percent; with much of the upward push coming from the federal stimulus funding. River/harbor development work advanced 27 percent year-to-date.
Residential building in November came in at $127.6 billion (annual rate), essentially unchanged from October. Single family housing edged up 1 percent after slipping 2 percent in October, as it regained the very gradual upward trend that’s been present since April. The November pace for single family housing was still 11 percent below the monthly average for 2008. Multifamily housing in November dropped 6 percent, falling back after a brief upturn in October. The largest multifamily project entered as a November start was a $45 million townhouse complex in Stafford VA, considerably smaller than the large projects in excess of $100 million that typically reached groundbreaking in recent years. The November pace for multifamily housing was 52 percent below its monthly average for 2008.
During the first eleven months of 2009, residential building was 34 percent less than the same period a year ago. Single family housing fell 26 percent year-to-date, as the result of this performance by geography – the South Central, down 18 percent; the Midwest, down 23 percent; the West, down 28 percent; the Northeast, down 29 percent; and the South Atlantic, down 33 percent. Multifamily housing on a year-to-date basis plunged 58 percent, as the result of this performance by geography – the Midwest, down 27 percent; the South Central, down 52 percent; the Northeast, down 57 percent; the South Atlantic, down 65 percent; and the West, down 70 percent.
The 28 percent decline for total construction starts at the national level during 2009’s January-November period was reflected in similar declines for total construction at the five region level. The year-to-date reductions for total construction by region were as follows – the South Central, down 26 percent; the Northeast, down 27 percent; the Midwest and West, each down 28 percent; and the South Atlantic, down 29 percent.
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