March Starts Advance 5%

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March Starts Advance 5%

New construction starts in March increased 5% to a seasonally adjusted annual rate of $743.7 billion, according to Dodge Data & Analytics. “The pattern for construction starts in early 2017, with three straight monthly gains, is the reverse of the three straight monthly declines that closed out 2016,” noted Robert A. Murray, chief economist for Dodge Data & Analytics. “While the construction start statistics will frequently show an up-and-down pattern, whether month-to-month or quarter-to-quarter, the improved activity in this year’s first quarter provides evidence that the construction expansion is still proceeding,” Murray continued. “This year’s first quarter has seen nonresidential building and public works rebound from the loss of momentum each experienced towards the end of 2016, helped respectively by the strong activity so far in 2017 for new airport terminal projects and new pipeline projects. Nonresidential building in 2017 should be able to stay on its upward track, supported by further growth for such institutional project types as school construction. As for public works, it’s also expected to show improvement over the course of 2017, although its prospects are less certain given its connection to legislative developments at the federal level. This includes how Congress will deal with the continuing resolution for fiscal 2017 appropriations scheduled to expire at the end of April, and whether a new federal infrastructure program will get passed this year.” The institutional side of the nonresidential building market grew 3% in March, with much of the support coming from an 83% surge for the transportation terminal category. Large airport terminals that were reported as March starts included two at Los Angeles International Airport – the $1.9 billion Delta relocation to Terminals 2 and 3 and the $961 million Midfield Satellite Concourse North (phase 1). Also entered as a March start was the $110 million Terminal 2 modernization at Fort Lauderdale-Hollywood International Airport. Through the first three months of 2017, the dollar amount of new airport terminal projects was $9.0 billion (including the $3.4 billion Central Terminal Building at New York’s LaGuardia Airport), easily topping the $3.7 billion in new airport terminal starts for full year 2016. Healthcare facilities in March increased 13%, aided by the start of these large projects – the $265 million Methodist University Hospital in Memphis TN and the $230 million North Alabama Medical Center in Florence AL. Also strengthening in March were religious buildings, up 9%; and public buildings (courthouses and detention centers), up 4%. On the negative side, educational facilities in March dropped 14% after February’s 11% gain, although March did include these noteworthy projects as construction starts – a $289 million research institute building in Seattle WA, a $170 million library and classroom facility at Temple University in Philadelphia PA, and a $138 million science building renovation at the University of Virginia in Charlottesville VA. Also retreating in March was the amusement and recreational category, which fell 29%.