NEW YORK (November 21, 2017) – New construction starts in October dropped 9 percent to a seasonally adjusted annual rate of $742.9 billion, pulling back after a 14 percent jump in September, according to Dodge Data & Analytics. Over the past two months the pattern for total construction starts was shaped by nonresidential building, which fell 30 percent in October after soaring 37 percent in September. Although nonresidential building in October did include the start of several very large projects, led by the $1.1 billion new ballpark for the Texas Rangers in Arlington TX, they were not the same magnitude as the three exceptionally large projects entered as September starts – a $6.0 billion ethane cracker plant in Pennsylvania, the $4.0 billion Delta Airlines new terminal facility at LaGuardia Airport in New York NY, and the $1.7 billion 50 Hudson Yards office tower in New York NY. Residential building in October slipped 1 percent, due to a slower pace for multifamily housing. Running counter was a sharp 27 percent increase for nonbuilding construction, which was lifted by the start of the $3.0 billion expansion of the Atlantic Sunrise natural gas pipeline in Pennsylvania and Virginia. For the first ten months of 2017, total construction starts on an unadjusted basis were $631.2 billion, up 1 percent from the same period a year ago. The year-to-date gain for total construction was restrained by a 38 percent drop for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first ten months of 2017 would be up 4 percent relative to the same period a year ago.

October’s data lowered the Dodge Index to 157 (2000=100), compared to a revised 173 for September which was the highest reading so far in 2017. “The construction start statistics have occasionally been subject to ‘spikes’ on a monthly basis, boosted by the presence of several unusually large projects, and September definitely qualified as one of those ‘spikes’,” said Robert A. Murray, chief economist for Dodge Data & Analytics. “The pace for nonresidential building in September was unsustainably high, so October’s decline was expected. Nonresidential building is still on track to show moderate growth for 2017 as a whole, helping to keep the expansion for overall construction activity going. On the residential side, multifamily housing is retreating from a very strong 2016, but to this point the retreat has been modest. And, the downward pull coming from nonbuilding construction appears to be easing, given the ongoing strength shown by pipeline projects and some recent improvement by highways, bridges, and mass transit.”

Nonresidential building in October was $258.7 billion (annual rate), down 30 percent after the 37 percent hike reported in September. The manufacturing building category dropped 67 percent following its six-fold jump in September that featured the start of the $6.0 billion ethane cracker plant in Pennsylvania. October did include several large manufacturing plants, such as a $675 million polyethylene production plant and a $450 million oil refinery, both located in Texas, but they were not close to matching the size of September’s ethane cracker plant. The institutional categories as a group in October fell 36 percent following a 25 percent increase in September that featured the start of the $4.0 billion new Delta terminal at LaGuardia Airport. Transportation terminal work was down 82 percent in October, and declines were also reported for educational and healthcare facilities. The educational facilities category dropped 29 percent in October, despite the start of such projects as a $180 million building renovation at the University of Connecticut in Storrs Mansfield CT, a $134 million innovation complex in Providence RI, and a $101 million high school in Little Rock AR. Healthcare facilities fell 21 percent in October, as only two projects valued at $100 million or more reached groundbreaking, compared to four such projects during September. On the plus side, the amusement and recreational category soared 121 percent in October, featuring the start of the $1.1 billion retractable roof ballpark for the Texas Rangers in Arlington TX and a $240 million expansion to the Lexington Convention Center in Lexington KY. October gains were also reported for religious buildings, up 20 percent; and public buildings (courthouses and detention facilities), up 15 percent.

The commercial categories as a group were able to advance 10 percent in October, even with a 14 percent retreat for office buildings from September that included the $1.7 billion 50 Hudson Yards project in New York NY. The decline for the office building category was limited by the October groundbreaking for several noteworthy projects, including the $440 million State Farm Park Center office complex in Dunwoody GA, the $331 million office portion of the $570 million Rainier Square mixed-use building in Seattle WA, and a $150 million data center in Allen TX. Store construction in October improved 34 percent from a subdued September, while new warehouse construction grew 27 percent with the help of a $235 million warehouse building in Staten Island NY and five Amazon distribution centers located in North Randall OH ($177 million), Orlando FL ($132 million), Thornton CO ($107 million), Portland OR ($85 million), and Troutdale OR ($64 million). Hotel construction in October strengthened 32 percent, with the boost coming from the start of a $170 million hotel in New York NY, the $148 million expansion of the Pala Casino Spa and Resort in Pala CA, and a $90 million renovation project at the Flamingo Hotel in Las Vegas NV.

Residential building in October receded 1 percent to $295.9 billion (annual rate), continuing to hover within the narrow range that’s been reported for the past six months. Multifamily housing dropped 3 percent in October, as there were four large multifamily projects valued each at $100 million or more that reached groundbreaking compared to seven such projects in September. The large October multifamily projects were a $445 million multifamily building in New York NY, a $150 million apartment complex in Newport Beach CA, the $138 million multifamily portion of the Rainier Square