HAMILTON, NJ – Total construction starts rose 19% in August to a seasonally adjusted annual rate of $793.3 billion. Gains were seen in all three major building sectors: nonresidential building starts rose 16% and residential building climbed 12%, while nonbuilding construction jumped 40% over the month. While large projects certainly influenced the August gains, removing those projects would still have resulted in a gain for the month.
Year-to-date through the first eight months of the year, starts were 14% lower than in the same period in 2019. Nonresidential starts were 24% lower and nonbuilding starts were down 20%, but residential starts were down less than one percent. For the 12 months ending August 2020, total construction starts declined 6% from the 12 months ending August 2019. Nonresidential building starts fell 13% and nonbuilding starts were 9% lower in the 12 months ending August 2020, while residential building starts rose 3%. In August, the Dodge Index rose 19% to 168 (2000=100) from the 141 reading in June. The Dodge Index was down 8% compared to a year earlier and 6% lower than its pre-pandemic level in February.
Construction starts continue to make up ground following the nadir in activity in April, stated Richard Branch, Chief Economist for Dodge Data & Analytics. Residential and commercial construction are driving the gains, while the public side of building construction is proving to be a drag on growth. The regional pattern has also evened out with gains in starts seen in every region but the Midwest in August — somewhat muting the concern over the potential impact of rising COVID cases in the South and West. The nascent recovery in starts, but, will face challenges as summer turns to fall. The expiration of enhanced unemployment insurance benefits and small business loans that were provided in the CARES Act, the budget crises facing state and local governments, and the impending expiration of the QUICK Act on September 30 will all have a dampening effect on starts.
Nonbuilding construction posted a 40% gain in August to a seasonally adjusted annual rate of $184.4 billion nearly reversing the sizable decline in the previous month as two large projects pushed activity higher. Starts in the utility/gas plant more than doubled, while environmental public works posted an 89% gain and highway and bridge starts went up 13%. Miscellaneous nonbuilding starts lost 5%.
The largest nonbuilding project to break ground in August was the $1.3 billion Wastewater Control Plant in San Francisco, CA. Also starting during the month were the $888 million Dania Beach Clean Energy Center in Dania Beach, FL and the $310 million new Aztec Stadium at San Diego State University in San Diego, CA.
Through the first eight months of the year, total nonbuilding starts were down 20% compared to the same period in 2019. Starts in the highway and bridge category were up 1%, while the environmental public works category dropped 15%, the miscellaneous nonbuilding sector fell 34%, and the electric power/gas plant category plunged 45%. On a 12-month rolling basis, total nonbuilding starts were down 9% in the most recent year compared to the 12 months ending August 2019. Starts in the street and bridge category dipped 2%, while starts in the electric power/gas plant category were down 12%. Environmental public works starts pulled back 8% and miscellaneous public works starts dropped 21%.
Nonresidential building starts in August were also aided by large projects in the office and manufacturing sectors leading to an increase of 16% to $236.7 million. Removing these projects, but, would not have prevented an increase in nonresidential building starts. Commercial starts rose 36% and manufacturing starts soared 201%. Institutional starts, but, fell 7% despite small gains in education and healthcare.
The largest nonresidential building project started in August was the $1.0 billion Facebook Data Center (Project Woolhawk) in Gallatin, TN. Also starting during the month was the $740 million Texas Instruments Fabrication Plant in Richardson, TX and a $700 million mixed-use office and hotel project in Boston, MA.
On a year-to-date basis, total nonresidential building starts were 24% lower than in the first eight months of 2019. Institutional building starts dropped 16%, while commercial starts slid 27% and manufacturing starts were 47% lower than a year earlier. Over the 12 months ending August 2020, total nonresidential building starts were down 13% from the 12 months ending in August 2019. Commercial starts were 16% lower, institutional starts were down 13%, and manufacturing starts slipped 1%.
Residential building starts went 12% higher over the month in August to a seasonally adjusted annual rate of $372.1 billion. Multifamily building starts increased 62%, while single family starts fell 3%.
The largest multifamily structure to break ground in August was the $549 million Mana olana Place Mixed Use in Honolulu, HI. Also starting in August were the $500 million Pacific Park Mixed Use Development in Brooklyn, NY and a $250 million condominium building at the Union Theological Seminary Space in New York, NY.
Through the first eight months of 2020, residential construction starts were down less than one percent versus a year earlier. Single family starts grew 4%, while multifamily starts slid 11%. For the 12 months ending in August 2020, total residential starts gained 3% with single family starts up 6% but multifamily starts down 4%.

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MINNEAPOLIS, MN – Hunt Real Estate Capital, a division of ORIX Real Estate Capital, has provided a $43 million Fannie Mae DUS Conventional Multifamily loan to refinance Ironclad Apartments, a 172-unit mid-rise apartment community in Minneapolis, Minnesota that debuted in 2019.
The loan refinances construction debt from a bank the borrower utilized to build Ironclad and a neighboring hotel starting in 2017.
“We were proud to partner with the sponsor, as well as Rohit Narayanan at Lighthouse Advisors, to complete this Fannie Mae refinance,” said Nicholas Diamond, vice president at Hunt. “This was the sponsor’s first agency deal and first multifamily project in over two decades, and we were humbled to be selected as their partner in this undertaking. With the new structure in place, Ironclad is well-positioned to reap the benefits of agency financing for years to come.”
In February of this year, the transaction was originally expected to proceed as a Fannie Mae Multifamily Near-Stabilization execution. In the wake of the COVID-19 crisis and subsequent market disruption, Fannie suspended the program, yet was able to work with Hunt to quickly pivot to the conventional option.
The $43 million loan features a low, fixed interest rate and 10-year term with three years of interest only followed by a 30-year amortization schedule. In addition to paying off construction debt with low-cost capital at a fixed interest rate, the closing provides for substantial cash-out proceeds to the sponsors of approximately $2.1 million.
Ironclad Apartments is a “class A” property with high-quality amenities, as well as two commercial units. Due to the high-quality nature of the asset and its prime location, Ironclad was able to successfully lease up and stabilize during the summer months despite challenges caused by the pandemic.

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LADY LAKE, FL – ConcordRENTS announced the Grand Opening of Lake Sumter Apartment Homes, a $28.7 Million affordable housing community, consisting of 158 apartment homes serving those making 40% – 80% of the area median income. Located minutes from the Lake Sumter Landing in The Villages, Lake Sumter Apartment Homes is the newest affordable community in 16 years in Sumter County.
Lake Sumter Apartment Homes is dedicated to providing safe and quality housing for the expanding needs of families in Sumter County. The community will appeal to the most discerning preferences including traditional 3-Tale Garden style building designs as well as unique Carriage Homes over Garages. Each home will be fully equipped with granite countertops and CleanSteel energy efficient appliances, along with other modern finishes. By offering more 3 and 4 bedroom homes than most other apartments communities, it provides opportunity for larger families and those wanting additional space for a guest room or home office. The residents will also be able to take advantage of community amenities with a business center, heart healthy cardio and fitness studio, walking path along community pond and a dog park.
The Villages is one of the largest age-restricted active adult communities in the country, expanding over 3 counties and 20,000 acres, and filled with over 100 miles of golf cart legal streets and trails. This 55+ community features three town squares, 60 recreational centers, as well as 12 championship golf courses, including the well-known Palmer Legends and Lake Sumter Apartment Homes is located just minutes from the epicenter.
Lake Sumter Apartment Homes is the first affordable phase of a three-phase 334 apartment home development. Funding for Lake Sumter Apartment Homes comes from $14.3 Million in Tax-Exempt Bonds, issued by the Housing Finance Authority of Volusia County, $10.85 Million in equity from the sale of Federal Housing Tax Credits allocated through Florida Housing Finance Corporation, and other sources provided through by the Developer, Atlantic Housing Partners, L.L.L.P.
ConcordRENTS is a national leader in high quality, customer-focused property management of affordable multifamily rental housing. ConcordRENTS oversees over 100 properties in Florida.

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