Pandemic leads to sharp pullback in commercial and multifamily construction starts in 2020
The value of commercial and multifamily construction starts in the top 20 metropolitan areas of the U.S. lost 23% in 2020, falling to $111.1 billion according to Dodge Data & Analytics. Nationally, commercial and multifamily starts tumbled 20% over the year to $193.4 billion. Commercial and multifamily construction starts in the top 10 metro areas dropped 23% during the year with only one metro area — Phoenix — reporting an increase. In the second largest group of metro areas (those ranked 11 through 20), commercial and multifamily construction starts also lost 23%, with only Denver and Kansas City, Missouri, posting an increase for the year.
The New York metropolitan area continued to be the largest market for commercial and multifamily starts at $23.5 billion but suffered a stark 25% decline from 2019. The Washington, D.C. metro area managed to maintain its second-place standing despite an identical decline in 2020 lowering commercial and multifamily starts to $8.9 billion. The Los Angeles metro area, which fell 21% to $7.4 billion, ranked third. The remaining top 10 metropolitan areas in 2020 were Dallas down 20% ($6.8 billion), Chicago down 9% ($6.4 billion), Boston 27% lower ($6.3 billion), Phoenix up 32% ($5.3 billion), Miami down 37% ($5.1 billion), Austin down 17% ($4.9 billion) and Houston down 47% ($4.5 billion). In sum, the top 10 metropolitan areas accounted for 41% of all U.S. commercial and multifamily construction starts in 2020, down from a 43% share in 2019.
The second largest metro group included: Atlanta down 41% ($4.3 billion), Philadelphia down 16% ($4.0 billion), Seattle down 31% ($3.9 billion), Nashville, Tennesse, down 3% ($3.9 billion), Denver up 17% ($3.3 billion), Orlando, Florida, down 17% ($3.1 billion), Kansas City, Missouri, up 20% ($2.5 billion), San Francisco down 46% ($2.4 billion), Tampa, Florida, down 19% ($2.4 billion), and Minneapolis down 42% ($2.4 billion). This group of metro areas accounted for 17% of total U.S. commercial and multifamily activity in 2020, 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 building projects (e.g., educational facilities, hospitals, convention centers, casinos, transportation terminals), manufacturing buildings, single family housing, public works, and electric utilities/gas plants. Total U.S. commercial and multifamily building starts dropped 20% in 2020 to $193.4 billion from the $240.3 billion in 2019. Commercial building starts lost 26% to $104.0 billion, while multifamily building activity slid 11% lower to $89.5 billion. Within the top 10 metro areas, commercial building starts dropped 26%, while multifamily building activity fell 21%. Within the second largest group of metropolitan areas, commercial building starts fell 30% in 2020, while multifamily building starts lost 15%.
“The pandemic is having a significant negative impact on commercial and multifamily construction across the country,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “While some areas stabilized over the summer, the current wave of the virus has further hindered activity. The recently passed $900 billion stimulus plan will go a long way towards re-energizing the economy.” Branch continued, “The construction sector will show signs of recovery in 2021, but, the road back to full recovery will be long and difficult. The effects of the pandemic on the U.S. economy and building markets will be felt for several years.”
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