Rock Products

MAR 2017

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www.rockproducts.com ROCK products • March 2017 • 93 ECONOMICS For all of 2016, total construction starts advanced 1 percent to $676.5 billion, a considerably smaller gain than the 11 percent increase reported for 2015, according to Dodge Data & Analytics. If the volatile manufacturing plant and electric utility/gas plant categories are excluded, total construction starts in 2016 would be up 4 percent, depicting a more gradual deceleration relative to the corresponding 9 percent increase in 2015. The 1 percent increase at the national level for total construction starts in 2016 was the result of a mixed per- formance at the five-region level. Total construction gains were reported in the West and the South Atlantic, each up 10 percent; and the Midwest, up 5 percent. Total construction declines were reported in the Northeast, down 2 percent (which reflected the retreat for multifamily housing in the New York metropolitan area); and the South Cen- tral, down 16 percent (which reflected that region's comparison to 2015 which included the start of several massive liq- uefied natural gas export terminals). "The construction start statistics over the course of 2016 revealed a varied pattern, with the end result being a slight gain for the year as a whole," stated Robert A. Murray, chief econo- mist for Dodge Data & Analytics. "On a quarterly basis, growth was reported during the first and third quarters, while activity settled back during the second and fourth quarters. In a broad sense, construction activity shifted to a more mature stage of expansion in 2016, characterized by a slower rate of growth for total construction compared to the 10 percent to 12 percent gains of the previous four years. Nonresidential Building For 2016 as a whole, nonresidential building advanced 4 percent to $227.7 billion, regaining upward momentum after slipping 2 percent in 2015. Over the past two years the percent change for nonresidential building has been dampened by substantial declines for the manufacturing plant category, which plunged 32 percent in 2015 and then another 27 percent in 2016. The weaker performance by manufac- turing plants reflected in particular a pullback for new petrochemical plant starts after the exceptional amount that was reported back in 2014. If the man- ufacturing plant category is excluded, nonresidential building in 2016 would show a 7 percent increase, slightly stronger than the corresponding 4 per- cent gain in 2015. The commercial categories as a group in 2016 climbed 11 percent, a faster rate of growth than the 7 percent rise in 2015. Leading the way in 2016 was office construction, increasing 21 per- cent as it continues to move upward from the extremely low amounts reported during the years immediately following the recession. Large office projects that reached groundbreaking in 2016 included the $2.0 billion 3 Hudson Boulevard office building in New York; the $1.5 billion One Vanderbilt Tower also in New York; the $700 million Gotham Center Towers in Long Island City, N.Y.; a $400 million data center in Grand Rapids, Mich.; and a $293 million portion of the Toyota Corporate Campus in Plano, Texas. The top five metropolitan areas in 2016 ranked by the dollar amount of new office starts, with their percent change from the prior year, were New York, down 2 percent; Washington, D.C., up 87 percent; Dallas-Ft. Worth, up 31 percent; Chicago, up 22 percent; and Seattle, up 54 percent. Hotel construction in 2016 advanced 19 percent, matching its rate of growth in the previous year. Large hotel proj- ects that reached groundbreaking in 2016 included the $465 million hotel portion of the $1.7 billion Wynn Casino in the Boston area, the $357 million hotel portion of the $530 million Gay- lord Rockies Resort and Convention Center in Aurora, Colo., and the $332 million hotel portion of the $630 mil- lion Montreign Resort and Casino in Kiamesha Lake, N.Y. Warehouse construction in 2016 improved 8 percent, continuing the upward trend that's been present since 2011, and commercial garages grew 13 percent. Store construction was the one commercial project type not able to register an increase in 2016, sliding 8 percent as its subdued recovery of the previous five years stalled. The institutional categories as a group increased 4 percent in 2016 following Construction Starts in 2016 Advance Only 1 Percent The 1 Percent Increase at the National Level for Total Construction Starts in 2016 Was the Result of a Mixed Performance at the Five-Region Level. By Mark S. Kuhar

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