Issue link: https://read.dmtmag.com/i/498244
62 • MAY 2015 • WORLD FENCE NEWS NEW YORK – At a seasonally adjusted annual rate of $724.3 billion, new construction starts in February advanced 16% compared to the previ- ous month, according to Dodge Data & Analytics. Much of the lift came from three massive projects valued each in ex- cess of $1 billion that were included as February construction starts. The nonbuilding construction sector was boosted by an $8.4 billion liquefied natural gas (LNG) export terminal in Louisiana and a $1.2 billion solar power facility in California, while nonresidential building registered a sharp gain partly as the result of a $3 billion petrochemical plant in Texas. Residential building also strength- ened in February, as growth for mul- tifamily housing outweighed a loss of momentum by single family housing. For the first two months of 2015, total construction starts on an unad- justed basis were up 34% from the same period a year ago. If projects in excess of $1 billion are excluded, the result would be more moderate gains for total construction – up 10% in February on a seasonally adjusted basis relative to January, and up 8% on an unadjusted basis during the first two months of 2015 relative to the same period a year ago. The February statistics produced a reading of 153 for the Dodge Index (2000 =100), compared to a revised 132 for January. For 2014 as whole, the Dodge In- dex averaged 123. "Due to the presence of several unusually large projects, the first two months of 2015 witnessed an espe- cially elevated level of activity that's exceeded the underlying trend for construction starts," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "Some pullback can be expected in coming months, since there are only a limited num- ber of LNG-related projects that may reach the construction start stage and petrochemical plants are not likely to match the exceptional amount that was reported last year, particularly with the recent decline in oil prices. "At the same time, the first two months of 2015 have shown sever- al noteworthy features that point to- wards the continued expansion for overall construction activity," Murray continued. "For commercial building, both office buildings and hotels are continuing to track upward, support- ed by the increasing amount of private financing directed at real estate devel- opment. "For institutional building, school construction is now seeing the bene- fits of large school construction bond measures that were approved in recent years, while healthcare facilities reg- istered an unexpectedly strong perfor- mance in February," he said. Murray added, "For residential building, multifamily housing contin- ues to show brisk development activ- ity in major cities. One area of con- cern for overall construction activity in 2015 relates to single family hous- ing – will it be able to move beyond the extended plateau that took hold in 2014? Another area of concern relates to public works and specifically high- way and bridge construction – will Congress be able to reach agreement on a new multiyear federal transpor- tation bill by the end of May, or at the very least a continuing resolution that shores up the depleted Highway Trust Fund?" Nonbuilding construction in Feb- ruary increased 9% to $253.8 billion (annual rate), which followed its sub- stantial 92% hike in January. The electric utility and gas plant category in February topped its heightened January amount by 17%, with the inclusion of the Sempra LNG export terminal in Hackberry, La. at an estimated construction start cost of $8.4 billion. (In January, two seg- ments of an LNG export facility in Freeport, Tex. valued at $6 billion were included as construction starts.) Other large projects that lifted the electric power and gas plant catego- ry in February were the $1.2 billion Stateline Solar Farm in California, a $675 million natural gas-fired power plant in Maryland, and another solar power facility in California valued at $450 million. Public works construction as a group improved 2% in February, with a substantial push coming from high- ways and bridges which advanced 12%. Large highway and bridge proj- ects in February were led by several in the New York, N.Y. metropolitan area – a $283 million tunnel rehabilitation in Brooklyn, N.Y., a $213 million toll plaza rehabilitation at the RFK Bridge in the Bronx, N.Y., and a $96 million toll plaza improvement project on the New Jersey Turnpike in Bayonne, N.J. The environmental public works categories in February were mixed, with river/harbor development up 29%, sewer construction up 4%, and water supply construction down 3%. The miscellaneous public works category, which had been boosted in January by the start of the $350 mil- lion Sun Life Stadium modernization in the Miami, Fla. area, fell 33% in February. Nonresidential building, at $224.9 billion (annual rate), surged 42% in February after a relatively weak per- formance in January. The manufacturing building cat- egory was a major contributor, soar- ing 663% in February with $3 billion for the estimated construction start cost of the Formosa ethane cracker and propane dehydrogenation plant in Point Comfort, Tex. February construction starts jump 16 percent MONTHLY SUMMARY OF CONSTRUCTION STARTS Prepared by McGraw-Hill Construction Research & Analytics MONTHLY CONSTRUCTION STARTS Seasonally Adjusted Annual Rates, in Millions of Dollars February 2015 January 2015 Percent Change Nonresidential building $ 224,876 $ 158,545 + 42 Residential building 245,716 233,269 + 5 Nonbuilding construction 253,756 231,878 + 9 Total construction $ 724,348 $ 623,692 + 16 THE DODGE INDEX (Year 2000 = 100, Seasonally Adjusted) February 2015 ................................ 153 January 2015 .................................. 132 YEAR-TO-DATE CONSTRUCTION STARTS Unadjusted Totals, in Millions of Dollars 2 Mos. 2015 2 Mos. 2014 Percent Change Nonresidential building $ 27,056 $ 22,247 + 22 Residential building 32,725 30,479 + 7 Nonbuilding construction 36,196 19,141 + 89 Total construction $ 95,977 $ 71,867 + 34 continued on page 64