As per a Dodge Data & Analytics construction forecast webinar, total building starts in the South area of the US climbed 13% in 2021, comparable to the national start rate of 14%. During the webinar, Sarah Martin, senior economist at Dodge, stated that, contrary to the emigration they are seeing in the Northeast and Midwest, the South has seen net migration into the area over the last two years. She said that construction activity has remained consistent, stressing that residential construction was driving the trend.
According to the data, warehouses and educational facilities are the largest non-residential sectors in the South region, which includes Alabama, Delaware, Arkansas, Florida, Georgia, Kentucky, District of Columbia, Louisiana, Maryland, Mississippi, North Carolina, Maryland, Oklahoma, South Carolina, Tennessee, Texas, Oklahoma, Virginia, and West Virginia.
Warehouses
Warehouse starts in the South are expected to reach $21.51 billion in 2022, up 16%, according to Dodge. However, the warehousing industry is starting to halt. Amazon, one of the most significant consumers of industrial space in the United States, recently announced a reduction in their e-commerce activities. That decision, according to Dodge Chief Economist Richard Branch, will have an impact on warehouse development activity, especially after 2022.
That decision, according to Dodge Chief Economist Richard Branch, will have an impact on warehouse development activity, especially after 2022. They believe the warehouse marketplace will rise this year, but the warehouse sector will begin to contract in 2023, all throughout our five-year estimates, Branch added. They will witness a decline in warehouse growth over time, but not immediately.
In the South, this year’s predicted warehouse increase of 16% is just half of the levels achieved in 2021, when warehouse starts increased by 31%. According to Dodge data, the warehousing sector gained 39%Â from its 2018 level in 2019, the year before the pandemic.
Education
Education starts in the South, the region’s largest industry, are expected to hit $25.56 billion in 2022, up 18%, according to Dodge. As the pandemic’s anxiety fades, Martin believes K-12 construction and universities will be more confident in investing in their facilities this year. For instance, the Fort Worth school system in Texas passed a $1.2 billion bond in November to remodel all of the district’s middle schools and construct new primary schools. According to Martin, similar legislation is being adopted all throughout the region. This year’s business is expected to rise up significantly, Martin said.
Manufacturing
According to Dodge, manufacturing starts in the South will reach $12.82 billion in 2022, up 3% from the previous year. As a result of a renewed attempt to bring more manufacturing plants back to the United States, start-ups in the industry are expanding in other parts of the country.
For example, four of the 10 largest commercial projects in the South in the last 12 months are in the manufacturing sector. The $1.5 billion US Steel Flat-Rolled Mill in Big River, Arkansas, and the $1.3 billion Methanex Methanol Plant in Geismar, Louisiana, are two examples.
However, in the South, that 3% increase is a considerable reduction from last year, when manufacturing starts in the region increased by 38% from 2020 levels. According to Martin, this is mainly due to the rising cost of materials and persistent staff shortages in the region. Moreover, rising inflation is enhancing the sector’s percentage growth. Martin claims that the sector is actually declining in real terms.
Laborconstraints and supply chain uncertainty are expected to impede significant expansion this year, Martin said. However, if one excludes inflation from the equation, percentage growth will be around -15 %.
Leaders and laggards in the South
Texas led the South region in construction starts in 2021, with $114.13 billion, up 7% from the previous year. Nonresidential activity in Dallas-Fort Worth rose by 27% in the first 4 months of 2022. Nonresidential activity in Austin increased by 37% in the first 4 months of 2022. With $88.12 billion in construction starts, Florida came in second in the South region, up 22% from a year ago. Nonresidential activity in the Miami area surged 19% in the first 4 months of 2022, while non-residential activity in Tampa increased 58%.
According to Dodge, construction starts in West Virginia and Mississippi fell the most in the South in 2021, by 16%Â and 15%, respectively, from 2020.
GDP growth projections for 2022
In 2022, Dodge predicts four states in the South will grow their GDP faster than the national average of 3.5%. Delaware tops the region with a predicted growth rate of 5.8%, followed by Texas and Florida, the 2 largest building start states, with expected growth rates of 5.4% and 4.5%, respectively. Oklahoma’s GDP is expected to expand by 4.4%, according to Dodge. Mississippi and Kentucky, with predicted GDP growth of 1.7% and 1.5%, respectively, complete the region.
Further to the prospects that one is expecting in construction in the US, there are a certain factors that must be considered with all dimensions and geographies put together.
The expansion of commercial building is happening in the US in spite of worries about supply chains, the situation in Ukraine, and inflationary pressures.
Growth in the industry will be fuelled by customers who are looking to create more robust supply chains through projects in the Western United States such as chip manufacturers.
Construction activity in the Northeast region of the USÂ is being hampered by a number of factors, including COVID-19, inflationary pressures, distribution network worries, and the possibility of a depression.
The amount of enthusiasm in the Midwest US is not quite on par with that found in other locations, but the region is home to some very remarkable performers who are capable of amazing things.
