Dodge Data & Analytics today released its 2017 Dodge Construction Outlook. The report predicts that total U.S. construction starts for 2017 will advance 5% to $713 billion, following gains of 11% in 2015 and an estimated 1% in 2016.

“The U.S. construction industry has witnessed signs of deceleration in 2016, following several years of steady growth,” says Robert Murray, chief economist for Dodge Data & Analytics. “Total construction starts during the first half of this year lagged behind what was reported in 2015, raising some concern that the current construction expansion may have run its course. However, the early 2016 shortfall reflected the comparison to unusually elevated activity during the first half of 2015, lifted by 13 very large projects valued each at $1 billion or more, such as a $9 billion liquefied natural gas export terminal in Texas and a $2.5 billion office tower in New York City. As 2016 has proceeded, the year-to-date shortfall has grown smaller, easing concern that the construction industry may be in the early stage of cyclical decline. Instead, the construction industry has now entered a more mature phase of its expansion, one that is characterized by slower rates of growth than what took place during the 2012-2015 period, but still growth. Since the construction start statistics will lead the pattern of construction spending, this means that construction spending can be expected to see moderate gains through 2017 and beyond.

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The U.S. construction industry is alive and kicking. With new developments rising from coast to coast, construction is having a 21 percent larger impact on the country’s GDP than in 2011, according to a new Stateline analysis of data from the U.S. Bureau of Economic Analysis. The sector should have an estimated economic impact of $650 billion this year—the largest it’s been since 2008 when adjusted for inflation.

The data shows that 6.7 million people were employed in the U.S. construction industry this summer, an increase of 1.3 million workers from the recorded low point in January 2011. For a little perspective, during the apex of the 2006 housing boom, the industry employed 7.7 million workers.

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Both CBD and suburban office acquisitions volumes in the U.S. remain below last year’s levels. The total acquisitions volume is off 17%. CBD is down 10%; suburban 23%.  One of the most important office investment questions is whether the decline in investment volumes has led to a decline in office pricing. In a few weeks, CBRE will reveal the results of its H1 2016 cap rate survey which will go a long ways to provide “pricing discovery.” In the meantime, analysis of the year-to-date data from Real Capital Analytics provides some perspectives.

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Despite quickly rising construction costs in recent years, San Francisco has seen an explosion of projects coming out of the ground. The 50 largest projects being built in San Francisco total $12 billion in construction costs alone.

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