Most metros add jobs in February; openings soar, hiring is flat; commercial scene varies
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Construction employment, not seasonally adjusted, increased from February 2015 to February 2016 in 234 (65%) of the 358 metro areas (including divisions of larger metros) for which the Bureau of Labor Statistics (BLS) provides construction employment data, decreased in 72 (20%) and was stagnant in 52, according to an AGC release and map on Tuesday that analyzed BLS data. (BLS combines mining and logging with construction in most metros.) The Anaheim-Santa Ana-Irvine, Calif. division again added the most jobs during the past year (12,500 construction jobs, 15%), followed by New York City (11,000 combined jobs, 9%); Orange-Rockland-Westchester, N.Y. (7,800 combined jobs, 23%); and Orlando-Kissimmee-Sanford (7,500 construction jobs, 13%). The largest percentage gains occurred in Monroe, Mich. (60%, 1,200 combined jobs); El Centro, Calif. (48%, 1,000 combined jobs); and Weirton-Steubenville, W.Va.-Ohio (29%, 400 combined jobs). The largest job losses again occurred in the Fort Worth-Arlington division (-4,100 combined jobs, -6%); Cleveland-Elyria, Ohio (-3,200 combined jobs, -10%); Midland, Texas (-3,500 combined jobs, -12%); Odessa, Texas (-3,000 combined jobs, -15%); and Greeley, Colo. (-2,600 combined jobs, -14%). The largest percentage declines for the past year were in Bloomington, Ill. (-16%, -400 combined jobs); Odessa; and Greeley.
There were 193,000 job openings in construction, seasonally adjusted, at the end of February, an increase of 41,000 in 12 months and the highest month-end total since 2007, according to the latest BLS Job Openings and Labor Turnover Survey data, released on Tuesday. In contrast, construction firms hired 327,000 employees, seasonally adjusted, in February, 9,000 fewer than in February 2015. These data are consistent with reports from contractors that they are having difficulty finding qualified workers and with BLS data showing the number of workers in February who said they were unemployed that month, had looked for work and had last worked in construction was at the lowest February total in the 17-year history of that series.
Real-estate research firm Cushman & Wakefield found "total U.S. net absorption of office space slowed by 59% in the first quarter from the previous quarter to 9.7 million square feet," online real-estate news site GlobeSt.com reported on Thursday. "However, tenant demand for office space kept pace with new construction. The national office vacancy rate remained flat at 13.5% in the first quarter—its tightest level since the third quarter of 2008.... Kenneth McCarthy, principal economist and applied research lead, [said], 'In the first quarter, approximately 2.0% of existing inventory was under construction or completed, roughly the same share that has held for more than a year now. By contrast, in 2007/2008 new construction represented 2.5% of existing inventory, and in 2000/01 it reached 4.3%.' [Chief Economist Kevin] Thorpe said, "The reality is, the office sector is underbuilding relative to office-using job creation.'" A GlobeSt.com article on Wednesday reported that real-estate research firm "JLL expects a good deal of expansionary activity in 2016. Developers in the top core metros of Boston, Chicago, Dallas, Houston, New York, San Francisco, Seattle and Washington, D.C., each have more than four million square feet of new space under construction, with New York far in the lead with about 14.3 million. These top eight metro areas account for more than half of the 96 million square feet underway. 'You're not going to see ground-breakings in every secondary city,' [JLL vice president Julia] Georgules says. 'It's going to remain limited.' Still, demand has been so strong in some secondary areas, especially Nashville and Austin, that developers do have robust pipelines."
GlobeSt.com reported on Wednesday that a report by real-estate research firm "Marcus & Millichap notes that available [hotel] rooms will rise 1.6% by year's end, primarily through the completion of new properties, the fastest growth rate in eight years. 'More than 110,000 rooms are scheduled for completion in 2016, and several thousand additional rooms are in the final phase before groundbreaking.'...'The U.S. hotel sector has reached a turning point,' according to the report. 'Following several years of rising occupancy, new supply will finally accelerate sufficiently to balance demand.'"
Retail construction, in square feet, is projected to increase slightly in 2016, according to CoStar figures cited by the Washington Post on Saturday. However, "for the first time in 35 years, 'population growth is actually faster than new construction,' said Suzanne Mulvee, director of research at CoStar." U.S. population has grown at less than 0.8% per year since the recession, U.S. Census Bureau data show." Still, while individual retailers may be overstored, some experts make the case that the retail real estate market overall doesn't have a glut of space. Millions of square feet of retailing space will be added this year, and commercial real estate experts say there is a healthy pipeline of interested tenants to fill it."
Price increases for construction steel are continuing. On Thursday, CMC Steel and Nucor Bar Mill Group each announced an immediate increase of $30 per ton for "most" merchant bars and structural products. On April 1, Gerdau Long Steel North America announced an increase of $30/ton effective April 4 for concrete reinforcing bar products, and Wire Mesh Corp. increased prices effective April 9 by about 5% for rolls and 3.5% for sheets. Please send notices to simonsonk@agc.org.
The National Association of Home Builders reported in its "Eye on Housing" blog on March 31 that its "analysis of the Census Bureau's quarterly tax data shows that $519 billion in taxes were paid by property owners over the four quarters ending in Q3 2015. This represents a $19 billion—or 3.9%—increase over the previous trailing four quarters, the largest annual increase since early 2010." Property tax receipts are a major funding source for school and other public construction.
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at www.agc.org/datadigest.
