by Shane Henson — August 30, 2013—New construction starts are forecast to rise 6% this year to $506 billion, according to the 2013 Dodge Construction Outlook Midyear Update from McGraw Hill Construction. This is the same rate of increase for total construction starts that was predicted last October, and follows the 8% gain that took place in 2012, the company says.
This key midyear update provides a detailed forecast of the industry’s economic environment and market trends. The following are the main points for the commercial building, institutional building, manufacturing building, and public works construction markets.
- Commercial building will grow 15%, after the 11% increase reported for 2012, although this year’s level of activity in dollar terms will still be 39% less than what was reported during the 2007 peak year. The pace of store construction is picking up, joining earlier gains registered by warehouses and hotels. The increase for office construction will remain relatively subdued in 2013, as more privately financed office projects are countered by fewer government office buildings.
- The institutional building market will slide an additional 5%, after falling 10% in 2012. While state fiscal health has shown some improvement, state and local budgets remain tight, further dampening school construction. Uncertainty related to hospital mergers and the implementation of the Affordable Care Act is restraining construction of healthcare facilities.
- The manufacturing building category will drop 8%, as firms hold back on plant investment given the sluggish U.S. economy and slow export markets.
- Public works construction will rise 3%, helped by growth for highways and bridges. The transportation sector was largely exempt from the federal spending cutbacks under the sequester, and the current year is seeing a number of large bridge projects reach the construction start stage.
The midyear update graph shows the total construction starts by level of activity and percent change.
(Click on image to enlarge)
