Construction Market Downgraded from Thermonuclear Hot to Just Boiling Lava Hot

Two days ago, I posted about how the AIA is predicting a growth of 4% in the non-residential market. Dodge Data & Analytics tempered that good news just a bit today by stating commercial and multifamily construction starts in 2017 totaled $195 billion, down 7% from the previous year. However, 2017 was up 8% than 2015. Of interest, seven of the top 10 metro areas Dodge tracks saw double-digit declines in starts (Boston -26%, Chicago -26%, DC -16%, DFW -17%, LA -20%, Miami -20% and NYC -16%). The multi-family sector, which has been on a multi-year tear, is particularly poised for a slow down according to Dodge Chief Economist Robert Murray due to tighter lending criteria in the banking industry and a slight uptick in vacancy rates (which are still near historic lows). The large metro areas have seen torrid growth which is encouraging developers to seek projects is other (read: less expensive) markets. Combine that with the current version of the Trump administration infrastructure plan, which while surrounded by question marks, calls for 25% of the funds to be allocated outside of large metro areas, means that the market is shifting geographically yet remains promising.