Although the COVID-19 pandemic is not yet over, the nation has come through the worst of the economic turmoil that accompanied it, according to a new report from Dodge Data & Analytics. Prospects for recovery in 2021 improved dramatically when vaccines became available. Construction starts were projected to gain 12%, reaching $893 billion — significantly stronger than the outlook before vaccines became available. Economic recovery will continue into 2022 with total starts expected to grow 6% to $946 billion. Let’s take a look at some of the core sectors and forecasted outcomes for 2022.
- SINGLE FAMILY HOUSING Starts will climb 4% to $314 billion. Starts have shown remarkable resilience during the pandemic fueled by historically low mortgage rates and homebuyers’ desires for additional space outside the urban core. Single family starts will reach their highest level since 2006 when the housing bubble had just begun to pop. Multifamily housing starts are also expected to increase 5% to $116 billion (659,000 units) after a 19% gain in 2021 and an 8% decline in 2020.
- COMMERICAL BUILDING Starts will increase 12% to $143 billion. Another strong year is forecasted as starts climb and square footage advances 9% to 987 MSF Dollar value growth will come on top of an expected 15% gain in 2021 that will only partially recoup the 20% loss seen in 2020.
- MANUFACTURING CONSTRUCTION Starts will be unchanged at $22.6 billion. Weaker activity in dollar value comes from the petrochemical side of manufacturing, which Dodge captures in dollars but not square footage since facilities are mostly storage tanks and pipelines rather than buildings.
- INSTITUTIONAL BUILDING Starts will increase 6% to $145 billion. The recovery in institutional building will continue in 2022 as starts increase and square footage advances 4% to 321 MSF Dollar value of starts will grow 5% in 2021 after a 10% drop in 2020. Square footage will grow 6% in 2021, following a 15% decline in 2020.
- ELECTRIC POWER/UTILITY Starts will increase 10% to $38.5 billion. Weak demand sent global energy prices tumbling during the pandemic, preventing new capacity from making its way to start. Prices are now recovering strongly as OPEC restricts output.
- PUBLIC WORKS Starts will advance 5% to $167 billion. The increase will follow a smaller 2% expected climb in starts during 2021 and a modest 2% decline in 2020 (when public works were often considered essential business and allowed to continue operation).