After a sluggish year with just 1 percent growth, backhoes and bulldozers should be busier in 2017 with 5 percent growth in construction starts, for a total volume of $713 billion. That is the prediction from industry leader Dodge Data & Analytics, described in Leslie Braunstein’s most recent article in Urban Land magazine, “Shovel-Ready,” which can be viewed at: http://bit.ly/2joECUs.
Robert Murray, Dodge’s chief economist, said that the industry is entering a more mature phase of expansion, with slow and steady growth in place of cyclical highs and lows. Factors at play include moderate job growth, healthy market fundamentals in commercial real estate, infrastructure and public works funding through state and local bond measures, stabilized energy prices, continued low interest rates, and low inflation. Dodge’s annual study was completed prior to the 2016 Presidential election.
An earlier Urban Land article by the same author, “Increased Use of Wood, Reduced Parking May Reduce Multifamily Construction Costs” (http://bit.ly/2g5YOcl) describes how a key modification to the International Building Code is leading to “a revolution in high-density multifamily wood-frame construction.” According to Dick Knapp of Foulger-Pratt, the new code allows for five stories of wood-frame apartment construction above a concrete slab and up to another three stories below the slab. Anything below the slab must be built of concrete and steel.
With interior features and finishes indistinguishable from those deployed in steel-and-concrete high-rises, these wood-frame mid-rise apartments can generate comparable rents while cutting construction costs by about $30,000 per unit. Reduced onsite parking – reflecting tenants’ greater use of public transportation, ride-sharing, cycling, etc. – also can help trim construction costs for new multifamily residences.