New Construction Starts in 2018 to Increase 3% to $765 Billion According to Dodge Data & Analytics

CHICAGO, Nov. 2, 2017 /PRNewswire/ -- Dodge Data & Analytics (https://www.construction.com/) today released its 2018 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts for 2018 will climb 3% to $765 billion.

"The U.S. construction industry has moved into a mature stage of expansion," stated Robert Murray, chief economist for Dodge Data & Analytics. "After rising 11% to 13% per year from 2012 through 2015, total construction starts advanced a more subdued 5% in 2016. An important question entering 2017 was whether the construction industry had the potential for further expansion. Several project types, including multifamily housing and hotels, have pulled back from their 2016 levels, but the current year has seen continued growth by single family housing, office buildings, and warehouses. In addition, the institutional segment of nonresidential building has been quite strong, led especially by transportation terminal projects in combination with gains for schools and healthcare facilities. As for public works, the specifics of a $1 trillion infrastructure program by the Trump Administration have yet to materialize, so activity continues to hover around basically the plateau for construction starts reached a couple of years ago. Total construction starts in 2017 are estimated to climb 4% to $746 billion."

"For 2018, there are several positive factors which suggest that the construction expansion has further room to proceed," Murray continued. "The U.S. economy next year is anticipated to see moderate job growth. Long term interest rates may see some upward movement but not substantially. While market fundamentals for commercial real estate won't be quite as strong as this year, funding support for construction will continue to come from state and local bond measures. Two areas of uncertainty relate to whether tax reform and a federal infrastructure program get passed, with their potential to lift investment. Overall, the year 2018 is likely to show some construction project types register gains while other project types settle back, with the end result being a 3% increase for total construction starts. By major sector, gains are predicted for residential building, up 4%; and nonresidential building, up 2%; while nonbuilding construction stabilizes after two years of decline."

The pattern of construction starts by more specific segments is the following:

    --  Single family housing will rise 9% in dollars, corresponding to a 7%
        increase in units to 850,000 (Dodge basis). Continued employment growth
        has eased some of the caution shown by potential homebuyers, while older
        Millennials in their 30s are helping to lift demand for single family
        housing. A modest boost will also come from rebuilding efforts in Texas
        and Florida after Hurricanes Harvey and Irma.
    --  Multifamily housing will retreat 8% in dollars and 11% in units to
        425,000 (Dodge basis). This project type appears to have peaked in 2016,
        helped by widespread growth across major metropolitan markets. That
        strength has begun to wane in 2017, given slight deterioration in market
        fundamentals (rent growth, occupancies) and a more cautious bank lending
        stance.
    --  Commercial building will increase 2%, following a 3% gain in 2017, and
        continuing to decelerate after the sharp 21% hike back in 2016. Office
        construction should see further growth in 2018, helped by broad
        development efforts in downtown markets, and warehouse construction is
        supported by greater demand arising from e-commerce. However, store
        construction will remain weak, and hotel construction will continue to
        pull back from its 2016 peak.
    --  Institutional building will advance 3%, maintaining its upward track
        after this year's 14% jump. Educational facilities should see more
        substantial growth next year, lifted by the passage of recent school
        construction bond measures. The robust volume of transportation terminal
        projects in 2017 may not be repeated in 2018, but activity should stay
        at a high level.
    --  Manufacturing plant construction will recede 1% in dollar terms, after
        surging 27% this year due to the start of several massive petrochemical
        projects. Next year should still see moderate growth for manufacturing
        plants in square footage terms.
    --  Public works construction will improve 3%, slightly more than the 1%
        growth in 2017. Highways and bridges should be helped as federal funding
        rises to the levels called for by the FAST Act, while the environmental
        categories will partly reflect reconstruction efforts related to
        Hurricanes Harvey and Irma. Additional benefit may come from the
        infrastructure program proposed by the Trump Administration, should it
        achieve passage in some form.
    --  Electric utilities and gas plants will drop 13%, falling for the third
        year in a row after the exceptional amount reported in 2015. Power plant
        construction starts will ease back as new generating capacity comes on
        line.

The 2018 Dodge Construction Outlook was presented at the 79th annual Outlook Executive Conference held by Dodge Data & Analytics at the Swissotel in Chicago IL. Copies of the report with additional details by building sector can be ordered here or by calling (800) 591-4462.

About Dodge Data & Analytics: Dodge Data & Analytics is North America's leading provider of analytics and software-based workflow integration solutions for the construction industry. Building product manufacturers, architects, engineers, contractors, and service providers leverage Dodge to identify and pursue unseen growth opportunities and execute on those opportunities for enhanced business performance. Whether it's on a local, regional or national level, Dodge makes the hidden obvious, empowering its clients to better understand their markets, uncover key relationships, size growth opportunities, and pursue those opportunities with success. The company's construction project information is the most comprehensive and verified in the industry. Dodge is leveraging its 100-year-old legacy of continuous innovation to help the industry meet the building challenges of the future. To learn more, visit www.construction.com.

Media Contact: Benjamin Gorelick | Spector & Associates +1-212-943-5858, ben@spectorpr.com

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