After an analysis of U.S. commercial and multifamily starts for the first six months of 2018, Dodge Data & Analytics reported this week that total volume of $101.4 billion was 1% less than what was recorded for the same period in 2017 but was 2% greater than starts from January 2016 through June 2016. In a metro-by-metro breakdown, half of the top 10 markets and 11 out of the top 20 metros saw increased commercial and multifamily starts during the first half of the year.
The New York City metro area led the top 20 markets with a start volume of $16 billion (+44%) for the first six months of 2018, but Boston (+56%) and Kansas City (+52%) had the highest percentage increases. Other metros that saw year-over-year increases through June 2018 were Miami (+34%); Minneapolis (+34%); Washington, D.C. (+23%); Phoenix (+19%); Austin, Texas (+15%); Portland, Oregon; (+15%) Seattle (+7%) and Orlando, Florida (+4%). The San Jose, California, metro area had the least January 2018 to June 2018 starts out of the top 20 markets at just over $1 billion (-37%), but Atlanta (-43%), Los Angeles (-38%) and San Francisco (-38%) saw the greatest decreases. Chicago (-37%) Denver (-25%), Dallas (-23%), Houston (-13%) and Philadelphia (-13%) also saw starts decline.
Multifamily starts kept the overall loss in volume to a minimum by balancing out an almost equal downturn in commercial starts. The multifamily market, according to Dodge chief economist Robert Murray, has shown resiliency after a 2017 decline, leading banks to ease up on lending standards. Other drivers of multifamily construction starts are an economy that requires housing for those entering the workforce, the millennial generation’s desire to live downtown, increasing home prices and fewer tax benefits of homeownership.
A healthy multifamily market means more business for the contractors that specialize in that sector. According to the National Multi Housing Council, Summit Contracting Group is the top multifamily builder in the U.S., based on 2017 unit starts of 6,053. Summit is followed in the rankings by Oden Hughes (5,220 units); Alliance Residential (5,170); Wood Partners (4,685); Mill Creek Residential (4,315); Greystar Real Estate Partners (3,963); Trammell Crow Residential (3,420); Suffolk (3,351); CBG Building Co. (3,269) and Carocon Corp. (2,957).
Summit recently won a $33 million contract to build a Class A apartment complex at Jacksonville, Florida’s Beachwalk development. The Sentosa Beachwalk apartments will include almost 350 units across a total of 354,972 square feet. One of the focal points of the development is a 14-acre, man-made beach from the firm Crystal Lagoons.
Crystal Lagoons’ pools are a popular feature for those developers that want to create a resort-style atmosphere. However, it looks like one community in northern Texas might have to do without. Developers for the $1 billion Bayside mixed-use development announced last month that they intended to ditch a lagoon from Crystal Lagoons that the former developer promised to city officials. The new project team told the city of Rowlett, Texas, that a crystal lagoon water feature would not draw in the much-needed commercial office tenants and that a more native landscape would be used instead.