Nonresidential Project Starts Decline 14% in June

A decline in nonresidential construction contributed to a drop in total construction starts in June, reports Dodge Construction Network (DCN). Total construction starts declined 9% in June to a seasonally adjusted rate of $1 trillion. Nonresidential starts dropped 14%, and residential starts lost 4%. Year-to-date, the number of total construction starts fell 5%, while residential and nonresidential starts were down 24% and 2%, respectively.

Year-to-date, the number of total construction starts fell 5%, while residential and nonresidential starts were down 24% and 2%, respectively.

Richard Branch, DCN’s chief economist, explains that the drop in June project starts can be traced to a lack of mega projects.

“The presence, or absence, of mega-projects, is a key influencer in this trend,” he says. “Nevertheless, high-interest rates and tightening lending standards are leading to uncertainty among owners and developers, also creating hesitation among stakeholders, leading them to assess whether projects will break ground carefully. These conditions will persist through the remainder of the year—meaning little forward motion in construction starts.”

Nonresidential Building Starts

Nonresidential building starts fell 14% in June to a seasonally adjusted annual rate of $348 billion. Commercial starts declined 6%, with gains in office and hotel offset by a pullback in warehousing and parking structures, while manufacturing starts lost 67%. Institutional starts gained 15% in June due to healthcare and airport terminal work. On a year-to-date basis through June, total nonresidential starts were 2% lower than that of 2022. Institutional starts gained 9%, while manufacturing and commercial starts fell 6% and 11%, respectively.

The largest nonresidential building projects to break ground in June were the $2.6 billion JetBlue Terminal 6 at JFK airport in Jamacia, N.Y., the $625 million first phase of the GlobiTech Semiconductor plant in Sherman, Texas, and a $558 million hospital tower at Strong Memorial Hospital in Rochester, N.Y.

Residential Starts

Residential building starts fell 4% in June to a seasonally adjusted annual rate of $344 billion. Single-family starts gained 8%, while multifamily starts lost 23%. On a year-to-date basis through June 2023, total residential starts were down 24%. Single-family starts dropped 27%, and multifamily starts declined by 17%.

The largest multifamily structures to break ground in June were the $500 million 1072 W Peachtree building in Atlanta, the $450 million Pendry-One Ashley condo tower in Tampa, and the $345 million Merchant Building in Columbus, Ohio.