Multifamily Starts Up 12% in First Half of 2021

The value of commercial and multifamily starts in the top 20 metropolitan areas of the U.S. gained 12% during the first six months of 2021 relative to the first half of 2020, according to Dodge Data & Analytics. Nationally, commercial and multifamily construction starts were 10% higher on a year-to-date basis through six months. In the top 10 metro areas, commercial and multifamily construction starts were up 12% through six months, with only three metro areas – Washington DC, Los Angeles CA, and Austin TX – posting declines. In the second-largest group of metro areas (those ranked 11 through 20), starts improved 11% on a year-to-date basis, with only Phoenix AZ, Houston TX, and Chicago IL losing ground.

The early months of the pandemic led to construction moratoriums and project delays in many of the country’s largest cities, resulting in very low levels of activity in April and May 2020. Additional insight on the health of these markets can be ascertained by comparing the first six months of 2021 to the same period in 2019 – before the pandemic. On that basis, commercial and multifamily starts were down 9% in the top 20 metro areas. At the same time, nationally, they were 5% lower, indicating that the pandemic affected construction activity more dearly in larger cities. In the top 10 metro areas, commercial and multifamily starts were 20% lower than 2019 through six months, while in metro areas ranked 11 through 20, they were 13% lower.

The New York metropolitan area was the top market for commercial and multifamily starts through six months at $12.6 billion, an 8% increase from the first half of 2020. The Dallas, TX metropolitan area was in second place for commercial and multifamily starts, totaling $4.5 billion through six months, a 12% gain over 2020. The Washington DC metro area was ranked third through six months but lost 7% to $4.3 billion. The remaining top 10 metropolitan areas through the first half of 2021 were:

• Boston, MA up 34% ($4.0 billion)
• Miami, FL up 26% ($3.5 billion)
• Los Angeles, CA down 22% ($3.4 billion)
• Philadelphia, PA up 86% ($3.3 billion)
• Seattle, WA up 61% ($3.2 billion)
• Atlanta, GA up 2% ($2.5 billion)
• Austin, TX down less than one percentage point ($2.5 billion).

In summary, the top 10 metropolitan areas accounted for 40% of all commercial and multifamily starts in the United States – the same share as in the first six months of 2020.

The second largest metro group included:

• Phoenix, AZ down 10% ($2.5 billion)
• San Diego, CA up 171% ($2.2 billion)
• Houston, TX down 30% ($2.2 billion)
• Denver, CO up 64% ($2.1 billion)
• Nashville, TN up 53% ($2.0 billion)
• San Francisco, CA up 114% ($1.9 billion)
• Chicago, IL down 54% ($1.9 billion)
• Minneapolis, MN up 71% ($1.7 billion)
• Kansas City, MO up 60% ($1.6 billion)
• Orlando, FL up 11% ($1.5 billion).

This group of metro areas accounted for 18% of all commercial and multifamily starts in the United States through six months, the same share as in the previous year.

The commercial and multifamily total is 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.

Through the first six months of 2021, total U.S. commercial and multifamily building starts rose 10% to $108.5 billion from the same period of 2020. Nationally, commercial starts were up 3% to $56.1 billion, while multifamily starts were 19% higher at $52.4 billion on a year-to-date basis. Within the top 10 metro areas, commercial building starts were 1% higher to $20.6 billion through six months, while multifamily building starts were up 23% to $23.3 billion. Within the second largest group of metropolitan areas, commercial building starts were 3% lower to $9.8 billion through six months, while multifamily starts totaled $9.9 billion and were 30% higher.

“The recovery from the COVID-19 pandemic has begun but is very uneven,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “Commercial construction has been buoyed by strength in the warehouse sector as large e-commerce companies build out their logistics infrastructure while office, retail, and hotel activity is subdued. Multifamily starts, meanwhile, have rebounded solidly following a weak 2020. The dollar value of commercial and multifamily starts should continue to improve over the coming six months; however, growth will remain muted due to high material prices and a shortage of skilled labor in the construction sector.