MHC Forecasts 6 Percent Rise in 2013 New Construction Starts

McGraw Hill Construction forecast a 6 percent climb in new construction starts for 2013 in its Aug. 12 Midyear Update to the 2013 Construction Outlook. Housing continues to lead the upturn, accompanied by modest gains for commercial building and public works, with institutional building continuing to retreat. This is the same rate of increase for total construction starts predicted last October, and follows the 8 percent gain in 2012, according to the report.“The recovery for construction continues to unfold in a selective manner, proceeding against the backdrop of the sluggish U.S. economy,” said Robert A. Murray, VP of economic affairs for McGraw Hill Construction, in the report. “On the positive side for construction, the demand for housing remains strong, market fundamentals for commercial building are strengthening, and lending standards for commercial real estate loans continue to ease gradually. On balance, the recovery for construction is making progress, but at a single-digit pace given the mix of pluses and minuses by major sector.”

Main points by sector for the 2013 construction market:

Multifamily housing will climb 23 percent in dollars and 20 percent in number of dwelling units, McGraw Hill reported, due to gains in occupancies and rents over the past year. Commercial building will grow 15 percent, but this year’s level of activity in dollars will still be 39 percent less than the 2007 peak year, according to McGraw Hill Construction. The pace of store construction is picking up, joining earlier gains registered by warehouses and hotels. Office construction starts will remain low due to a decrease in new government office buildings.The institutional building market will decrease an additional 5 percent, after falling 10 percent in 2012, due to tight state and local budgets, dampening school construction, and uncertainty related to hospital mergers and the implementation of the Affordable Care Act, restraining construction of healthcare facilities, according to the report.Firms are holding back on plant investment given the sluggish U.S. economy and slow export markets, resulting in an 8 percent drop in the manufacturing building category.Public works construction will rise 3 percent, according to the report, spurred by a number of large bridge projects.The value of electric utilities new construction starts will drop by 40 percent, following the record high that was achieved in 2012 which included the start of two large nuclear facilities.Share this article: