The value of commercial and multifamily construction starts in the top 20 metropolitan areas of the U.S. increased 18% from 2020 to 2021, according to Dodge Construction Network. Nationally, commercial and multifamily construction starts increased 16% in 2021. In the leading half (the top 10 metro areas), commercial and multifamily starts rose 18% in 2021, with two metro areas, Washington, DC, and Los Angeles, California, posting a decline. In the lesser half of metro areas (those ranked 11 through 20), commercial and multifamily starts rose 17% in 2021, with Chicago, Illinois, and Nashville, Tennessee, losing ground from 2020.
Commercial and multifamily construction starts staged a solid recovery in 2021 following stalled projects and growing uncertainties that plagued the industry in 2020. It bears noting, however, that commercial and multifamily construction starts remain below 2019 levels, highlighting that the sector has yet to fully recover from the impact of the pandemic. In fact, larger metro areas have struggled to gain momentum as demand for construction shifts away from denser urban areas.
In the top 20 metro areas of 2021, commercial and multifamily starts were 5% below the level recorded in 2019, and national commercial and multifamily starts were 2% below the 2019 level. In the top 10 metro areas, commercial and multifamily starts were 9% below their 2019 levels, while starts in the metro areas ranked 11-20 were up 5% from 2019. This reveals that in 2021, smaller, less dense metropolitan areas are becoming increasingly popular.
The New York metropolitan area was the top market for commercial and multifamily starts in 2021 at $26.8 billion, an increase of 14% from 2020. The Dallas, Texas, metropolitan area was in second place, totaling $10.7 billion for the year, an impressive 45% gain over 2020. The Miami, Florida, metro area was ranked third in 2021, with commercial and multifamily starts totaling $8.4 billion, a dramatic 65% increase over 2020.
The remaining top 10 metropolitan areas through the first half of 2021 were:
- Washington, DC, down 9% ($8.4 billion)
- Boston, Massachusetts, up 16% ($7.3 billion)
- Los Angeles, California, down 12% ($7.1 billion)
- Atlanta, Georgia, up 49% ($6.6 billion)
- Seattle, Washington, up 48% ($6.2 billion)
- Phoenix, Arizona, up 11% ($6.0 billion)
- Houston, Texas, up 5% ($5.5 billion)
In summary, the top 10 metropolitan areas accounted for 39% of all commercial and multifamily starts in the United States, unchanged from their 2020 share.
The second-largest metro group included:
- Philadelphia, Pennsylvania, up 30% ($5.5 billion)
- Austin, Texas, up 9% ($5.4 billion)
- Chicago, Illinois, down 31% ($4.9 billion)
- Orlando, Florida, up 40% ($4.3 billion)
- Denver, Colorado, up 21% ($4.3 billion)
- Minneapolis, Minnesota-Wisconsin, up 60% ($4.1 billion)
- San Diego, California, up 93% ($3.9 billion)
- San Francisco, California, up 22% ($3.7 billion)
- Nashville, Tennessee, down 8% ($3.7 billion)
- Riverside, California, up 41% ($3.1 billion)
This secondary group of metro areas accounted for 18% of all commercial and multifamily starts in the United States in 2021, unchanged in share from the previous year.
The commercial and multifamily total is comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing. Not included in this ranking are institutional projects (e.g., educational facilities, hospitals, convention centers, casinos, transportation terminals), manufacturing buildings, single family housing, public works and electric utilities/gas plants.
In 2021, total U.S. commercial and multifamily building starts rose 16% to $236.6 billion from 2020. Nationally, commercial starts were up 8% to $120.3 billion, while multifamily starts were 25% higher at $116.4 billion. Within the top 10 metro areas, commercial building starts rose 11% to $45.1 billion in 2021, while multifamily starts gained 25% to $48.0 billion. Within the second largest group of metropolitan areas, commercial building starts declined 4% in 2021, while multifamily starts improved 42% from 2020.
“Commercial and multifamily construction starts staged a strong rebound in 2021, despite the continued impact of the COVID-19 pandemic,” stated Richard Branch, chief economist for Dodge Construction Network. “This recovery, however, has been fairly uneven with the focus on warehouse and multifamily activity, while office and hotel construction remain more constrained by the pandemic. Looking ahead, 2022 should bring with it a more even recovery spread across most commercial project types, while multifamily will continue to benefit from the high cost of single-family homes. While positivity abounds for the year ahead, be aware that high material prices and a shortage of skilled labor will prove to be limiting factors and will restrain overall growth.”
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