Manufacturing projects boost starts in Western states - Sachse Construction
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Manufacturing projects boost starts in Western states

western states projects boost

Total construction starts in the U.S. West region climbed 13% last year to $223.73 billion, essentially in line with national start growth of 14%, according to a Dodge Data & Analytics construction outlook webinar.

Manufacturing, education and data center projects largely accounted for the boost. For 2022, Dodge forecasts manufacturing starts to reach $14.39 billion, a 47% increase from 2021.

“Manufacturers are looking for a more reliable supply chain, so concerted efforts have begun to bring more chip manufacturers into the U.S.,” said David Reaves, senior economist at Dodge, during the webinar.

Starts in the manufacturing sector, which includes electric vehicle factories, chip plants, food related production facilities and pharmaceutical labs, have been on a wild ride since the beginning of the pandemic.

In 2020, manufacturing starts fell to $1.74 billion, about a 37% drop from its 2019 level of $2.74 billion. But that rebounded to $9.81 billion in 2021, and starts in the sector are projected to increase more than sevenfold in 2022 from pandemic lows, according to Dodge.

The two biggest starts in the six months ended in March included the $9.98 billion Intel chip factor project and the Taiwan Semiconductor factory, both in Arizona.

For all of 2022, Dodge forecasts education starts to reach $16.5 billion, a 6% increase from 2021.

The $650 million Los Angeles Museum of Art expansion, included under the education category, was the fourth largest construction project since October 2021, according to Dodge.

The hospitality sector overall in the West region remains just a fraction of what it was before the pandemic. For all of 2022, Dodge projects hotel and motel construction starts in the West will reach $2.38 billion. That would be a 14% improvement from 2021, but would still be down about 45% from its 2019 level of $4.32 billion, according to Dodge.

West leaders and laggards

California led the West region in 2021 with over $86.32 billion of total construction starts, a 17% increase from 2020.

But for the first four months in 2022, nonresidential construction activity in the Los Angeles region and San Diego region dropped 41% and 37%, respectively.

At the same time, nonresidential activity in the Las Vegas region jumped 125% during the first four months of 2022. The $400 million renovation at the Fontainebleau resort and casino project on the Strip (pictured above) ranked as the 10th largest project in the West region since October 2021.

Arizona ranked second in the West region, with close to $32 billion in total construction starts, a 29% increase from a year ago.

At the bottom of the West region, total construction starts in Hawaii reached $4 billion in 2021, a 11% drop from a year ago. That’s because of the state’s exposure as a tourism hub, which has been severely affected by the pandemic, said Reaves.

Dodge forecasts the state GDP of Wyoming to rise about 4.6% this year, the most in the West region. That’s largely due to the war in Ukraine, which should benefit energy-producing states like Wyoming.

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