Office to Lead 2016 Commercial Construction

new Jason stats graphic - June 2015Office, shopping center, warehouse and hotel construction is expected to jump 11% in 2016, an increase from the 4% improvement projected for 2015, with office development reclaiming its historical role as the leader in the commercial building recovery, a new report says.

At the same time, multifamily construction dollar volume is anticipated to rise 7% on a 5% increase in built units to 480,000, according to the newly released 2016 Dodge Construction Outlook.  That level of gain would be at a slower pace than 2015’s growth, but it is still a gain as continuing development is extended by low vacancies, rising rents and the demand for apartments from millennials, the report released by Dodge Data & Analytics said.

But the growth in commercial building will again be led by the segment’s historical driver — office development — with an assist in private development and demand from technology and finance firms.

Residential, including single-family homes, and nonresidential U.S. construction starts are forecast to rise by 6% in 2016 to $712 billion on the heels of a 9% increase in 2014 and an estimated 13% jump by the end of this year — the strongest annual gain so far in the current expansion, Dodge Data & Analytics said.

The 2015 hike can be largely traced to the heavy industrial projects at the start of the year, including several massive liquefied natural gas terminals in the Gulf Coast region and new power plants, the company noted.

Continued strength in multifamily construction is behind the strong performance in total residential building, which rose 18% in 2015. Single-family is again registering growth after a no-growth year in 2014.  Total nonresidential building slowed in 2015 after jumping 24% the year before, and is now forecast to be flat to slightly down as a result of a sharp pullback for new manufacturing plant starts and a slight drop-off in momentum by the commercial and institutional building segments, according to Dodge.

Other 2016 forecasts provided by Dodge were:

  • Institutional building will increase 9%, up from a 6% rise in 2015.  Specifically, the educational facilities category is benefiting from the passage of recent school construction bond measures that are spurring increases in K-12 school construction.
  • Manufacturing plant construction spending will drop off by another 1% on the heels of 2015’s 28% plunge caused primarily by the decrease in large petrochemical plant starts.
  • Public works is projected to be in 2015, but the new multiyear federal transportation bill anticipated to pass Congress by the first half of 2016 should spur growth in late 2016 and into 2017.

For more information about Philly office space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf ( or Leor Hemo ( at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philadelphia office space.

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