HAMILTON, NJ – Total construction starts dropped 4% in January to a seasonally adjusted annual rate of $794.3 billion. Nonresidential building starts were flat in January, while nonbuilding starts dropped 10% and residential starts were 4% lower. From a regional perspective, starts were lower in three of the five regions – the Midwest, South Atlantic, and South Central. Starts rose, but, in the Northeast and West.
With only one month of 2021 completed, a year-to-date analysis will provide small useful information. Additionally, January 2020 (i.e. pre-pandemic) was the culmination of a strong cyclical upswing in construction starts that started in 2010 and thus provides a poor point of comparison. An alternative viewpoint for analysis is comparing 12-month totals. For the 12 months ending January 2021 total construction starts were 11% below the 12 months ending January 2020. Nonresidential starts were down 25%, while nonbuilding starts dropped 15%. Residential starts, but, were 5% higher for the 12 months ending January 2021. In January, the Dodge Index lost 4% to 168 (2000=100) from the 175 reading in December.
The tenuous beginning to construction starts in 2021 highlights the long and rocky road ahead for the sector this year , stated Richard Branch, Chief Economist for Dodge Data & Analytics. Over the course of the year the economy will recover as more Americans receive their vaccinations. But, the construction sector s recovery will take time to materialize due to the deep scars caused to the industry by the pandemic. Patience will be key in the months to come.
Nonbuilding construction started 2021 with a resounding 10% decline in January to a seasonally adjusted annual rate of $168.4 billion. Every nonbuilding sector posted a decline during the month — environmental public works fell 6%, highways and bridges dropped 7%, while starts in the utility/gas plant category lost 13%, and miscellaneous nonbuilding starts plunged 17%.
The largest nonbuilding projects to break ground in January were the $825 million (450 MW) Desert Quartzite Solar Facility in Blythe CA, the $427 million (345 MW) Mesquite Sky Wind Farm in Putnam TX, and the $375 million (300 MW) RE Slate Solar Farm in Stratford CA.
For the 12 months ending January 2021, total nonbuilding starts were 15% lower than the 12 months ending January 2020. On a 12-month sum basis, street and bridge starts were 5% higher, but environmental public works starts were 3% lower, miscellaneous nonbuilding starts dropped 28%, and utility/gas plant starts lost 40%.
Nonresidential building starts were unchanged in January at a seasonally adjusted annual rate of $224.5 billion. Commercial starts were 1% higher during the month as a sizeable gain in warehouse construction offset declines elsewhere. Institutional building starts fell 9% in January, with education and healthcare construction down sharply. Manufacturing starts, meanwhile, rose 81% due to the start of two large projects.
The largest nonresidential building project to break ground in January was Nucor s $850 million steel mill in Brandenburg KY. Also starting during the month were Nikola Motor s $470 million hydrogen-electric truck plant in Eloy AZ, and the $327 million Riddle Hospital campus modernization in Media PA.
For the 12 months ending January 2021, nonresidential building starts tumbled 25% relative to the 12 months ending January 2020. Commercial starts dropped 27%, institutional starts were 15% lower, while manufacturing starts collapsed 59%
Residential building starts fell 4% in January to a seasonally adjusted annual rate of $401.4 billion. Multifamily housing starts were 7% lower, while single family dropped 3%.
The largest multifamily structure to break ground in January was the $200 million DOT Block Residences in Dorchester MA. Also getting underway during the month were the $153 million Halley Rise Block D-1 mixed-use building in Reston VA and the $112 million 1400 W Randolph St apartments in Chicago IL.
For the 12 months ending January 2021, total residential starts were 5% higher than the 12 months ending January 2020. Single family starts gained 12%, while multifamily starts slid 12% on a 12-month sum basis.

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AUSTIN, TX – PEG Companies [PEG], a leading commercial real estate investment firm known for its unique approach to making value, has bought its 14th extended stay hotel for conversion into quality Class B apartments. The Habitat Suites Austin joins PEG Companies’ growing portfolio of hotel-converted-to-apartments across the country.
Ideally located at 500 E Highland Mall Boulevard, the property is currently undergoing renovations and remains on track for an early summer delivery. PEG is in the process of adding a fitness center, workspace areas, cosmetic improvements, and other updates necessary to convert the property into a market-leading multifamily community while leasing out one building of furnished units on their current state.
The acquisition of Habitat Suites is the latest of many extended-stay acquisitions for PEG. The firm is currently raising a $150 million fund, the PEG Extended Stay Conversion Fund, L.P., dedicated specifically to their strategy of converting discounted extended-stay hotels into quality Class B workforce housing in strong markets across the United States. This Austin location has become the third acquisition within the new fund, following in the footsteps of an earlier fund which has 11 extended stay hotel acquisitions.
As the hospitality industry experienced the heavy burden of COVID-19 impacts last year, real estate groups across the country recognized the value in PEG’s extended-stay conversion strategy and started to follow suit. When questioned about how this increased focus from other groups may be impacting PEG’s strategy, Cameron Gunter, Chief Executive Officer of PEG clarified:
“We are seeing more groups out there bidding for the older extended-stay hotels. What we are finding is that being new to the game, these other groups are not thinking through the implications of certain buys. We have been at this since 2018, and we are very selective in which hotels we buy. We are confident that by remaining disciplined in our approach, we will build a strong portfolio of Class B multifamily housing units across the country and continue to stand out as the leader in this space.”
When vetting potential acquisitions, PEG has several criteria on its list including urban and suburban-urban sub-market locations with strong rental occupancies, ongoing projected growth metrics in the area, and recent sales of comparable Class B multifamily units. The population within a three-mile radius of Habitat Suites and the adjacent Highland Mall is projected to grow 10.33 percent within the next five years. In addition, the greater Austin community continues to make progress on redeveloping the mall into 1.3M square feet of Austin Community College campus space; 800,000 square feet of office space; 150,000 square feet of retail space; new outdoor trails; several new parks; and 1,200 Class A apartments.
PEG investment executives say that, once converted into a multifamily community, the new use will help satisfy the growing demand for attainable housing in the Austin area.
“Like so many communities across the country, Austin is in dire need of reasonably priced housing for the working class,” clarified Soren Halladay, Chief Investment Officer at PEG. “We are excited to give this property a bit of tender like and care in order to transform it better than before and, in the process, offer people an inviting, stylish place to call ‘home.'”

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MARIETTA, GA – TerraCap Management LLC, a privately held investment firm based out of Naples, Florida, announced the sale of The Knolls and The Crossings. The two multifamily properties consist of a total of 692 units and are both located in the northwestern Atlanta suburb of Marietta.
The Knolls and The Crossings were bought in September 2017 as part of a four-property, 1,100-unit multifamily portfolio buy. The two other properties in the portfolio, the Arbors and The Crossings at Holcomb Bridge, saw dispositions in December 2019 and September 2020 respectively.
Steve Hagenbuckle, Founder and Managing Partner of TerraCap, said, “Our Atlantic southeast asset management team led by Matt Stewart and Robert Witt executed our business plans for these assets with precision, and the outcomes highlight their capabilities and enthusiasm for delivering results to our investors. Our property management team First Communities and our sales team led by David Gutting of NGKF played critical roles for us from acquisition to disposition and added value to the outcomes.”
After acquiring The Knolls and The Crossings in 2017, TerraCap implemented a strategy of capital investment into the properties coupled with the general organic rent growth that the surrounding area was achieving. TerraCap executed significant capital upgrades to the interiors, exteriors, and common grounds for both properties. “We saw strong potential with these assets when we bought them,” said Steve Excellent, Partner and National Director of Acquisitions for TerraCap. “Our team efficiently improved the properties and generated unit premiums,” Excellent added. “We feel the location and quality of the properties themselves will provide continued upside for the buyer. We wish them the best.”
David Gutting of NGKF represented TerraCap on the sale. First Communities Management represented TerraCap on property management.

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