Masonry Magazine June 2000 Page. 29
March Construction Contracts Jump 3 Percent
The value of new construction starts advanced 3 percent in March to a seasonally adjusted annual rate of $459.1 billion, it was reported by the F.W. Dodge Division of The McGraw-Hill Companies. The overall gain was due to sharp improvement for nonresidential building, outweighing modest declines for residential building and nonbuilding construction (public works and utilities).
Nonresidential building in March jumped 10 percent to $181.7 billion. The commercial sector was buoyed by strength for office buildings, up 22 percent, following a relatively subdued pace during the first two months of 2000. Major office starts included a $140 million project in New York City, a $90 million project in Charlotte, NC, a $70 million project in Boston, and a 560 million project in Seattle. Murray indicated, "Office construction is now witnessing greater activity in downtown markets, which in many cases continue to see vacancy rates below 10 percent." Both stores and warehouses in March held steady with the elevated levels posted in February, although hotel construction experienced a 37 percent decline. Manufacturing construction in March surged 135 percent, aided by the start of a $400 million semiconductor plant in Arizona. Yet, if this large project is excluded, manufacturing construction still shows a 45 percent increase over February, in what may be the initial stage of a strengthening trend for this category after the extended weakness in 1999.
The nonresidential total in March was also boosted by a robust amount of school construction, up 32 percent. Healthcare facilities climbed 23 percent, with the help of an $80 million medical center in Baltimore, MD and a $78 million hospital in Winston-Salem, NC. Transportation terminals were up 13 percent due to the continued strength for airport terminal work, and public buildings (courthouses and detention facilities) climbed 6 percent. On the negative side, religious construction settled back 14 percent, while amusement-related projects (exhibition halls, theaters, and sports arenas) were down 3 percent. Although March included the start of a $325 million football stadium in Houston, the slippage for the amusement category was due to the comparison against an unusually strong February that featured several large convention center projects.
Residential building, at $205.0 billion, retreated one percent in March. This reflected a 3 percent decline for single family housing, in combination with an 11 percent increase for multifamily housing. After a strong start to 2000, single family housing is now showing signs of settling back. In part this is the result of the higher cost of financing fixed mortgage rates stayed below 8 percent for most of 1999, but the first three months of 2000 have seen rates hover in the range of 8.1 percent to 8.4 percent. Also, consumer confidence has retreated from January's all-time high, and further dampening of housing demand may result from the recent volatility in the stock market, due to a diminished "wealth effect". At the same time, multifamily housing is expected to see modest growth this year. Murray noted, "Multifamily housing witnessed a comparatively subdued expansion during the 1990's, and the real estate finance community continues to view this property type as a target for investment." By region, residential building in March registered the following pattern: the South Central, up 8 percent; the Northeast, up 6 percent; the Midwest, up 3 percent; the West, down 5 percent; and the South Atlantic, down 7 percent.
F.W. Dodge, a business unit of the McGraw-Hill Construction Information Group, has been the nation's leading source of construction information since 1891.
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MASONRY-MAY/JUNE, 2000 29