New construction starts in December slipped 5 percent to a seasonally adjusted annual rate of $613.0 billion, according to Dodge Data & Analytics. The latest month’s decline for total construction was due to sharply reduced activity for the nonbuilding construction sector, reflecting further erosion by public works as well as a steep plunge by the electric utility/gas plant category. At the same time, nonresidential building in December held steady with its November pace, and residential building was able to register moderate growth.

Nonresidential Building

Nonresidential building in December was reported at $224.0 billion (annual rate), basically unchanged from November. The manufacturing plant category jumped 124 percent, bouncing back from a weak November with the lift coming from the start of a $1.2 billion pharmaceutical plant in Clayton, N.C.

The commercial categories as a group advanced 11 percent in December, making a partial rebound after falling 20 percent in the previous month. Hotel construction climbed 74 percent, reflecting the start of the $164 million hotel portion of the $500 million Skyplex Entertainment Complex in Orlando and a $138 million hotel at New York’s JFK International Airport (as part of the conversion of the historic TWA Flight Center building).

Office construction in December increased 25 percent, boosted by the start of two large data centers in Aurora, Ill., ($255 million) and Ashburn, Va. ($160 million), as well as by the start of a $117 million renovation project at Rockefeller Center in New York. Smaller gains in December were reported for commercial garages, up 13 percent; and stores, up 8 percent. Warehouse construction was the one commercial project type to retreat in December, falling 35 percent.

The institutional building categories as a group dropped 17 percent in December. Amusement-related construction plunged 70 percent, following its elevated activity in November that included the start of the $3.0 billion football stadium for the Los Angeles Rams in Inglewood, Calif. Despite the steep decline, the amusement category did include two noteworthy projects as December starts – the $242 million amusement park portion of the Skyplex Entertainment Complex in Orlando and a $130 million student recreation/aquatics center at San Jose State University in San Jose, Calif.

Reduced activity was also reported in December for public buildings (courthouses and detention facilities), down 17 percent; and healthcare facilities, down 12 percent. On the plus side, the educational facilities category jumped 34 percent in December, reaching its highest amount in 2016. Large projects that supported the increase for educational facilities were the $150 million renovation of a marine research center in Los Angeles, a $117 million research building for the University of California at Riverside, and an $84 million renovation of an elementary school in the Bronx, N.Y.

Transportation terminal work grew 20 percent in December, aided by the start of a $120 million expansion to Concourse A North at the Charlotte Douglas International Airport in Charlotte, N.C. The religious building category bounced back 87 percent in December from an extremely weak November amount.

Residential Building

Residential building in December climbed 9 percent to $306.9 billion (annual rate). Multifamily housing finished the year on a strong note, rising 26 percent after retreating 12 percent in November.

December featured groundbreaking for 14 multifamily projects valued each at $100 million or more, led by the $275 million Ancora Apartment Tower in Chicago, a $260 million condominium tower in Minneapolis and a $250 million condominium tower in Sunny Isles Beach, Fla. Single-family housing in December increased 4 percent, maintaining the modest if at times hesitant upward trend that was present during 2016.

Nonbuilding Construction

Nonbuilding construction in December plummeted 41 percent to $82.0 billion (annual rate), with especially steep declines by two project types susceptible to month-to-month volatility – electric utilities/gas plants and miscellaneous public works. The electric utility/gas plant category plunged 89 percent in December, following a 58 percent hike in November that reflected the start of the $2.1 billion Elba Island Liquefaction Project in Savannah, Ga., which will enhance natural gas liquefaction and exporting capabilities at that location.

Miscellaneous public works, which includes site work, pipelines and mass transit, fell 47 percent from November, which received support from the start of the $155 million Yerba Buena Island Redevelopment site work project in San Francisco. Weaker activity in December was also reported for sewer construction, down 8 percent; highways and bridges, down 10 percent; and river/harbor development, down 74 percent. Water supply construction was the one nonbuilding project type able to report a December gain, surging 53 percent with the push coming from the start of large water treatment facilities in North Dakota ($130 million) and California ($110 million).

Full-Year 2016

For all of 2016, total construction starts advanced 1 percent to $676.5 billion, a considerably smaller gain than the 11 percent increase reported for 2015. If the volatile manufacturing plant and electric utility/gas plant categories are excluded, total construction starts in 2016 would be up 4 percent, depicting a more gradual deceleration relative to the corresponding 9 percent increase in 2015.

For 2016 as a whole, nonresidential building advanced 4 percent to $227.7 billion, regaining upward momentum after slipping 2 percent in 2015. Over the past two years the percent change for nonresidential building has been dampened by substantial declines for the manufacturing plant category, which plunged 32 percent in 2015 and then another 27 percent in 2016. The weaker performance by manufacturing plants reflected in particular a pullback for new petrochemical plant starts after the exceptional amount that was reported back in 2014. If the manufacturing plant category is excluded, nonresidential building in 2016 would show a 7 percent increase, slightly stronger than the corresponding 4 percent gain in 2015.

The commercial categories as a group in 2016 climbed 11 percent, a faster rate of growth than the 7 percent rise in 2015. Leading the way in 2016 was office construction, increasing 21 percent as it continues to move upward from the extremely low amounts reported during the years immediately following the recession.

Warehouse construction in 2016 improved 8 percent, continuing the upward trend that’s been present since 2011, and commercial garages grew 13 percent. Store construction was the one commercial project type not able to register an increase in 2016, sliding 8 percent as its subdued recovery of the previous five years stalled.

The institutional categories as a group increased 4 percent in 2016 following the slight 1 percent gain reported in 2015. Educational facilities, the largest institutional category, rose 3 percent with the upward push coming from K-12 schools while college/university construction settled back from earlier gains

The 2016 amount for residential building was $287.0 billion, up 6 percent and a smaller gain than the 16 percent hike reported for 2015. Much of the deceleration was due to a considerably slower increase for multifamily housing, which grew just 3 percent as opposed to the 22 percent jump in 2015. The nation’s leading multifamily market by dollar volume, New York, dropped 28 percent in 2016 after surging 53 percent in 2015.

Multifamily construction in New York City had been supported by the 421-a program, which provided tax incentives to developers who included affordable housing in their projects. During 2015, the pending expiration of the 421-a program contributed to developers moving up the start date for projects, while the expiration of the program in January 2016 removed the incentives. If the New York metropolitan area is excluded, multifamily housing for the nation in 2016 would be up 13 percent in dollar terms, essentially the same as the corresponding 14 percent increase in 2015.

For the full year 2016, nonbuilding construction dropped 11 percent to $161.8 billion, retreating after the 24 percent increase reported in 2015. Much of the nonbuilding decline was due to a 25 percent reduction for the electric utility/gas plant category following its sharp 127 percent ascent in 2015. While the dollar amount of gas plant projects fell 67 percent in 2016, the electric power-related portion of the category came through with a 12 percent gain.

The public works categories as a group retreated 5 percent in 2016 after a 3 percent pickup in the previous year. Highway and bridge construction fell 14 percent in 2016, essentially returning to the 2014 amount after increasing 13 percent in 2015. Annual declines for 2016 were also reported for river/harbor development, down 11 percent; and sewer construction, down 14 percent; while water supply construction was able to edge up 2 percent. The miscellaneous public works category registered a strong 21 percent gain in 2016, helped by a 162 percent increase for pipeline work.