The Washington DC metro area recorded the third highest increase in commercial and multifamily construction starts in the first six months of the year, the Dodge Construction Network says.
The DC area ranked behind New York City and Dallas, TX, but ahead of the other top 20 metopolitan areas, which overall saw an increase in construction value of 24% from 2021 according to Dodge Construction Network.
In the Washington, D.C., metropolitan area, commercial and multifamily construction starts rose 35% in the first half of 2022 to $5.5 billion. On a year-to-date basis, multifamily starts gained 14% through six months.
The largest multifamily projects to break ground during the first six months were the $329 million Reston Next Block D mixed-use project, the $125 million Atworth College Park affordable housing project, and the $95 million Pooks Hill Road apartments.
Through six months of 2022, commercial starts sped ahead 57%, with retail as the only sector to post a decline. The largest commercial projects to get started through the first six months were $940 million Digital Dulles Buildings 7 and 8 data center project, the $400 million The Rose Gaming Resort, and the $208 million Equinix data center.
Nationally, commercial and multifamily construction starts increased 18% year-to-date. In the top 10 metro areas, commercial and multifamily starts rose 28% in the first six months of 2022 compared to that of 2021. Three metro areas (Seattle, WA, Los Angeles, CA, and Philadelphia, PA) posted a decline. In metro areas ranked 11 through 20, commercial and multifamily starts rose 16% on year-to-date through six months, although five metro areas (Boston, MA, Chicago, IL, Nashville, TN, Minneapolis, MN, and Kansas City, MO) slipped from the first half of 2021.
Commercial and multifamily construction has made impressive gains in 2022 largely driven by rising demand for apartments and condos. A nascent recovery in the commercial sector, however, has created more broad-based improvements across the country. These increases are even more considerable as the sector continues to combat rising prices, shortages of key materials and labor, and higher interest rates.
The New York metropolitan area was the top market for commercial and multifamily starts during the first half of 2022 at $15.3 billion, an increase of 20% from the first half of 2021. The Dallas, TX, metropolitan area was in second place, totaling $8.1 billion in the first six months of 2022, a 72% year-to-date gain.
During the first half of 2022, the top 10 metropolitan areas accounted for 40% of all commercial and multifamily starts in the United States, up from 37% during the first six months of 2021.
Commercial and multifamily starts are comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing. Not included in this ranking are institutional projects (e.g., educational facilities, hospitals, convention centers, casinos, transportation terminals), manufacturing buildings, single family housing, public works and electric utilities/gas plants.
In the first half of 2022, total U.S. commercial and multifamily building starts rose 18% from the first half of 2021 to $139.5 billion. Nationally, commercial starts climbed 14% year-to-date through six months to $70.0 billion, and multifamily starts gained 24% to $69.6 billion. Within the top 10 metro areas, commercial building starts rose 19% to $24.8 billion in the first six months of 2022, and multifamily starts gained 36% to $31.4 billion. Within the second-largest group of metropolitan areas, commercial building starts moved 19% higher through six months of 2022, and multifamily starts improved 13%.
“The construction sector is at a cross-roads,” stated Richard Branch, Chief Economist for Dodge Construction Network. “The recovery from the pandemic morphed in 2022 by encompassing more sectors than just warehouses and single family housing despite rampant inflation in construction materials, a lack of key goods, and a stark shortage of skilled construction labor. Even though the level of projects currently in planning portends a bright second half to the year, the Federal Reserve’s fight against inflation has taken a toll on the economy and raised concerns that a recession could occur. As a result, construction starts are likely to move sideways over the second half of the year and potentially stall as the calendar shifts into 2023.”