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Construction spending during December 2015 was estimated at an annual rate of $1,116.6 billion according to the U.S. Department of Commerce. This figure is 8.2% above the December 2014 estimate. “The value of construction in 2015 was $1,096.3 billion, 10.5% above the $993.4 billion spent in 2014.”
“For the first time in over a year, construction across all three major property types increased in a given quarter during the fourth quarter,” said Ryan Severino in the Q4 2015 REIS Construction First Glance report.
Of the three major property types—(office, retail and multifamily)—apartment construction continues to lead the way, with Q4 2015 marking the third consecutive quarter with over 50,000 units completed nationwide.
For the office sector, Q4 2015 construction registered nearly 11 million SF and was the third consecutive quarter that construction has been above 9 million SF. A major indicator of the recovery is the return of spec office building nationwide. Retail construction also increased for the third consecutive quarter with approximately 2 million SF completed in Q4.
Nationwide, 292,000 new jobs were added in December 2015 bringing total job growth to 2.7 million for the year and marking the “longest streak of private-sector job growth on record” at 70 months, according to the Bureau of Labor Statistics. The unemployment rate was unchanged from November and remains at 5.0% at the end of Q4.
Speaking of spec, in Atlanta, Seven Oaks Company LLC broke ground in January 2016 on a 15-story spec office building on I-285, reported The Atlanta Business Chronicle. The project will be the fourth office building in an 83-acre mixed use development in Brookhaven called Perimeter Summit. The $140 million project, to be known as 4004 Summit, is only the second spec office project under construction in the city, after Three Alliance Center.
“As the AJC notes in a story titled ‘High-impact projects loom large in 2016,’ thousands of apartments are still in the city’s pipeline, two professional stadiums are nearing top-out, and developers are taking chances again like it’s 2005,” reported Curbed. In addition, metro Atlanta is expected to add 80,000 jobs this year according to The Atlanta Business Chronicle.
So it’s safe to say the massive wave of development in Atlanta isn’t over. While Buckhead Atlanta, Ponce City Market, Avalon and Krog Street Market are now mainstays to the city, we know SunTrust Park, Mercedes Benz Stadium, a MARTA expansion, and a redevelopment of both Underground Atlanta and the Civic Center are visible on the horizon.
In addition, Tyler Perry is redeveloping Fort McPherson into a studio and John Portman & Associates, along with Georgia Tech, are developing Technology Square Phase II. Curbed also calls “The Roof” at Ponce City Market—set to open in spring of 2016—“the cherry on one remarkable piece of adaptive-reuse cake.”
And let’s not forget Atlanta’s potential from an industrial perspective. According to REoptimizer, who named Atlanta as one of the Best Warehouse Space Markets for 2016, “Atlanta has the distinction of being the only major metropolitan area in the country where supply of large contiguous spaces currently outpaces demand. The healthy supply is not stopping developers, though, since millions of square feet of brand new space will be coming online during 2016.”
Not only is supply outpacing demand, but Atlanta is a city “well placed for regional facilities” since it’s close to the Eastern Seaboard and is home to Hartsfield-Jackson International Airport, which has been the world’s busiest airport for 17 years.
Overall, the U.S. outlook is good and the tide is still high for construction. And, Atlanta, conveniently, happens to be a good example.
Bull Realty, Inc., Research