The value of new construction starts advanced 12% in October to a seasonally adjusted annual rate of $469.8 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Cos. Much of the upward push came from nonresidential building, lifted by the start of a massive manufacturing project as well as by broader strengthening across several structure types.
Also contributing to the total construction gain in October was a slight increase for the housing sector. Meanwhile, nonbuilding stayed even with its elevated September amount, helped by the start of several large electric power plants. Through the first 10 months of 2011, total construction on an unadjusted basis came in at $355.6 billion, down 3% from the same period a year ago.
The October data produced a reading of 99 for the Dodge Index (2000=100), up from September’s 89, and the highest level so far this year.
“After registering an up-and-down pattern during the first seven months of 2011, the construction start statistics from August through October have, on balance, shown improvement,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “Much of this has been related to the start of very large projects, such as October’s huge manufacturing facility and several electric power plants.
“However, more sustained expansion for construction starts will require a supportive economic environment, which has yet to emerge. Job growth remains meager, and bank lending has picked up only slightly. Furthermore, tight fiscal conditions at all levels of government mean decreased funding for a wide range of publicly financed projects, and this will carry over into 2012.”
Nonresidential building in October climbed 36% to $180.0 billion (annual rate). The manufacturing plant category soared 740%, boosted by $3.0 billion for work on the Adam’s Fork Energy project in Wharncliffe, W.Va. This facility, when completed, will convert regional coal into gasoline. If the Adam’s Fork Energy project is excluded from October statistics, manufacturing plant construction would still advance, but at a modest 2% clip, while nonresidential building would be up 9% and total construction would be up 4%.
Office construction in October also posted a large percentage gain, climbing 58%. Support for the office category came from the start of a $285-million office building in New York City, which reached groundbreaking after being put on hold for the past couple of years. Other large office projects that supported October’s office volume included a $200-million Facebook data center in Prineville, Ore., a $77-million operations center for the electric utility district in the Sacramento, Calif., area, and a $63-million military office building at Hickam Air Force Base in Hawaii.
Warehouse construction in October increased 34%, helped by the start of an $80-million distribution center in Rome, Ga., while hotel construction grew 4%, with the lift coming from a $125-million renovation to a convention center hotel in King of Prussia, Pa. Store construction in October continued to languish, sliding 15%.
On the institutional side of the nonresidential market, the amusement-related category jumped 98%, aided by the $235-million renovation of the Cobo Convention Center in Detroit and groundbreaking for a $180-million sports arena in Lincoln, Neb. Gains were also posted by the public buildings category (courthouses and detention facilities), up 39%; and churches, up 8%.
The largest institutional category, educational buildings, slipped 3% in October, although several large high schools did reach groundbreaking in Delaware ($115 million), Connecticut ($81 million), Utah ($62 million), and Texas ($51 million). Health-care facilities in October retreated 8%, despite the start of a $275-million hospital at Fort Benning, Ga., and a $132-million hospital addition in Danbury, Conn. The transportation terminal category in October dropped 35%, following its heightened volume in September.