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New Dodge Report Looks at Industry's 2021 Start

Thursday, November 12, 2020

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Dodge Data & Analytics recently released its 2021 Dodge Construction Outlook report, used for industry forecasting and business planning.

This year, the report predicts that total U.S. construction starts will increase 4% in 2021, to $771 billion. Chief Economist Richard Branch cites the COVID-19 pandemic uncertainties, paired with the notions of recovery, behind these numbers.

The Report

“The COVID-19 pandemic and recession has had a profound impact on the U.S. economy, leading to a deep drop off in construction starts in the first half of 2020,” said Branch. “While the recovery is underway, the road to full recovery will be long and fraught with potential potholes. After losing an estimated 14% in 2020 to $738 billion, total construction starts will regain just 4% in 2021.”

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Dodge Data & Analytics recently released its 2021 Dodge Construction Outlook report, used for industry forecasting and business planning.

According to the report specific segments are predicted to follow patterns such as:

  • The dollar value of single-family housing starts will be up 7% in 2021 and the number of units will grow 6% to 928,000;
  • Multifamily construction, however, will pay the price for single family’s gain—the large overhang of high-end construction in large metro areas combined with declining rents will lead to dollar values dropping 1% while the number of units started will fall 2% to 484,000;
  • The dollar value of commercial building starts will increase 5% in 2021;
  • Warehouse construction will be the clear winner as e-commerce giants continue to build out their logistics infrastructure while office starts will also increase due to rising demand for data centers (included in the office category) as well as renovations to existing space;
  • Institutional construction starts will increase by 1% as growing state and local budget deficits impact public building construction;
  • Education construction is expected to see further declines in 2021, while healthcare starts are predicted to rise as hospitals seek to improve in-patient bed counts;
  • The dollar value of manufacturing plant construction will remain flat in 2021.
  • Declining petrochemical construction and weak domestic and global activity will dampen starts, while a small handful of expected project groundbreakings will level out the year;
  • Public works construction starts will see little improvement as 2021 begins due to continued uncertainty surrounding additional federal aid for state and local areas; and
  • Electric utilities/gas plants will gain 35% in 2021, led by expected groundbreakings for several large LNG export facilities and an increasing number of wind farms.

“Uncertainty surrounding the next wave of COVID-19 infections in the fall and winter and delayed fiscal stimulus will lead to a slow and jagged recovery in 2021. Business and consumer confidence will improve over the year as further stimulus comes in early 2021 and a vaccine is approved and becomes more widely distributed, but construction markets have been deeply scarred and will take considerable time to fully recover,” Branch said.

“The dollar value of starts for residential buildings will increase 5% in 2021, nonresidential buildings will gain 3%, and nonbuilding construction will improve 7%. Only the residential sector, however, will exceed its 2019 level of starts thanks to historically low mortgage rates that boost single family housing.”

Current Numbers

In terms of present-day numbers, the Associated General Contractors of America has been releasing monthly employment reports since the start of the COVID-19 pandemic, with its most recent report releasing late last week.

According to AGC, construction employment increased by 84,000 jobs in October, in both nonresidential and residential categories, amounting to a 1.2% increase from September.

The Association noted, however, that the COVID-19 pandemic is still causing a growing number of projects to be delayed or canceled, and employment still remains at about 3.9% below the February peak.

   

Tagged categories: COVID-19; Economy; Good Technical Practice; Jobs; Market; Market data; NA; North America

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