Total construction starts are estimated to rise 13 percent to $675 billion in 2015, according to the 2016 Dodge Construction Outlook. However, the increase largely is due to a 159 percent rise in the electric utility and gas plant category. Without including that category, total construction starts would be estimated to rise 8 percent, which is less than the 11 percent increase recorded in 2014.
The Dodge Construction Outlook states nonresidential building is expected to remain flat or decrease slightly in 2015, which follows the 24 percent increase reported in 2014. This largely is due to a significant decrease in the manufacturing plant category, which is reporting substantially fewer energy projects, particularly the construction of petrochemical plants, than last year.
The following information includes results reported in the 2016 Dodge Construction Outlook for specific categories in the nonresidential construction industry.
Commercial construction starts are estimated to decrease 4 percent from 607 million square feet in 2014 to 585 million square feet in 2015. However, the dollar value of commercial construction starts will increase 4 percent to $84.3 billion.
Retail construction starts are expected to continue their slight decline, decreasing 5 percent to 110 million square feet in 2015. However, the dollar value is expected to increase 2 percent to $18.2 billion. This year marked the second year of declines in this sector. The low numbers are tied heavily to slow retail sales increases and an increase in stores closing this year, as well as the slow residential building sector in 2014.
On the other hand, e-commerce sales are thriving, increasing 14.1 percent from 2014 to 2015 (to $83.9 billion). This has led to an increase in warehouse construction starts, which have increased 258 percent from 2011 to 2014. However, that growth began to slow this year, decreasing 7 percent to $163 million.
Last year saw a strong office construction sector due to large project starts for companies such as Apple and Amazon. This year, construction starts for offices decreased 8 percent to $100 million, though overall starts in this sector are positive, with a 91 percent increase since 2010.
The hotel construction sector is expected to increase 18 percent this year to 68 million square feet and 22 percent in dollar value to $13.9 billion. This increase largely is due to rising occupancy rates, which Smith Travel research reported rose 67.3 percent from January 2015 to September 2015.
Institutional construction is on a slow upward climb. Because much of the construction in this sector is funded by federal, state and local governments, growth has been slow in the past few years. This year, institutional construction increased 2 percent to 312 million square feet, a 5 percent decrease from 2014. Dollar values of construction starts rose slightly higher to 6 percent ($110 billion).
Education construction starts rose 2 percent this year to 127 million square feet and the dollar value is expected to increase 8 percent to $47.8 billion. These increases are due to a rise in student enrollment, as well as schools breaking ground on construction projects that were put off during slower economic times. This year, construction of K-12 schools increased 3 percent and community colleges increased 6 percent, while four-year colleges decreased 17 percent.
Health care construction starts are expected to remain flat compared to 2014 at 68 million square feet. However, the dollar value of constructions starts in this sector are expected to rise 2 percent to $23.3 billion.
Continuing a downward trend, public construction starts are expected to decrease 6 percent this year to 15.4 million square feet. Religious construction starts are expected to decrease as well, falling 5 percent to 9.3 million square feet.
On a more positive note, amusement construction starts are expected to increase 4 percent this year to 45.9 million square feet and new starts for transportation terminal construction rose in 2015 by 5 percent, or 21.2 million square feet.
Driven heavily by energy-related construction along the Gulf Coast, manufacturing construction starts have been on the rise in recent years. However, decreasing oil prices are causing many oil-related projects to be put on hold, which is leading to a considerable decrease in manufacturing plant construction. Manufacturing construction starts for 2015 are expected to fall 22 percent to 60 million square feet, as well as 28 percent in dollar value to $25.3 billion.
Public Works, Electric and Gas
Construction starts on public works projects rose 2 percent to $122.2 billion this year. Electric utilities and gas plant construction starts increased significantly to 159 percent in 2015 to $60 billion.
Construction starts on environmental public works is expected to remain the same as 2014 at $33.7 billion. River and harbor development is expected to decrease 3 percent and water supply construction starts are expected to decrease 2 percent, while sewer construction is expected to increase 4 percent.
Highway and bridge construction starts are expected to rise 13 percent to $65.4 billion in 2015, with Florida, Texas, California, New York and Illinois leading the way in terms of dollar amounts. Other construction starts, including rail and mass transit, airport runways, and oil and natural gas pipelines, are expected to decrease 18 percent.
Electric power and gas plant construction are expected to rise 159 percent to $60 billion this year. Of that amount, natural gas plant projects accounted for $31 billion and electric power plant projects accounted for $29 billion.