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Construction Growth Expected in 2015

Construction starts will rise next year for commercial and institutional building, according to a 2015 Construction Outlook report released by Dodge Data & Analytics. The report predicts that total U.S. construction starts for 2015 will rise 9% to $612 billion -- a larger gain than the 5% increase to $564 billion estimated for 2014.

“The construction expansion should become more broad-based in 2015, with support coming from more sectors than was often the case in recent years,” said Robert Murray, chief economist and vice president for Dodge Data & Analytics. “The economic environment going forward carries several positives that will help to further lift total construction starts. Financing for construction projects is becoming more available, reflecting some easing of bank lending standards, a greater focus on real estate development by the investment community, and more construction bond measures getting passed. While federal funding for construction programs is still constrained, states are now picking up some of the slack. Interest rates for the near term should stay low, and market fundamentals (occupancies and rents) for commercial building and multifamily housing continue to strengthen.”

This 32-page report covers the major sectors of the U.S. construction market with breakouts for detailed categories within the residential, nonresidential and engineering sectors. In addition, it provides an outlook for the broad types of construction within each of the five major regions of the country.

Commercial building is expected to increase 15% -- slightly faster than the 14% gain estimated for 2014. Office construction has assumed a leading role in the commercial building upturn, aided by expanding private development as well as healthy construction activity related to technology and finance firms. Hotel and warehouse construction should also strengthen, although the pickup for stores is more tenuous.

Institutional building will advance 9%, continuing the moderate upward trend that’s been established during 2014. The educational building category is now seeing an increasing amount of K-12 school construction, aided by the financing made available by the passage of recent construction bond measures. Healthcare facilities are expected to show some improvement relative to diminished activity in 2014.

Multifamily housing will also increase 9% in dollars and 7% in units to 405,000 (Dodge basis). Occupancies and rent growth continue to be supportive, although the rate of increase for construction is now decelerating as the multifamily market matures.

Copies of the report with additional details by building sector can be ordered from the Dodge Data & Analytics website, here. Additional reports and projections are available from Dodge at http://construction.com/market_research.

The January issue of MSC will also include a 2015 forecast for the steel industry by AISC vice president John Cross -- stay tuned!


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