Less money was spent kicking off commercial real estate construction in the area during the first half of 2017, but Chicago showed more staying power than most major U.S. markets.
Commercial and multifamily construction starts in the Chicago area were valued at $3.8 billion, down 1 percent from the first half of last year, according to Dodge Data & Analytics. That includes a 5 percent increase in commercial volume and a 6 percent decrease in apartment and condominium starts compared with the same period a year earlier.
Chicago’s slowdown was a tap of the brakes after $8.6 billion in new projects for all of 2016, the most since at least 2000, Dodge chief economist Robert Murray said. Chicago-area construction starts rose 37 percent last year.
“I would interpret the 1 percent drop not as a negative but as showing the Chicago market holding steady after the enhanced rate that was reached last year,” Murray said.
Nationally, the estimated cost of new projects that began in the first of the year fell 9 percent, to $86.8 billion. Multifamily starts fell 18 percent nationwide, while commercial starts were down 1 percent, according to Dodge.
The figures do not include some types of construction, such as single-family homes.
Construction starts fell in eight of the nation’s 10 largest metropolitan areas, including plunges of 29 percent in the Dallas area, 27 percent in Boston, 23 percent in Seattle and 22 percent in New York. Chicago and Washington stayed virtually flat from 2016, each with a decrease of 1 percent.
“Chicago was somewhat of a latecomer to the commercial expansion and has now joined the commercial expansion, whereas some markets like New York that were at the forefront of the expansion are down from their record pace,” Murray said.
San Francisco, up 48 percent, and Atlanta, up 19 percent, were the only top-10 markets with more money flowing into new construction in the first half of this year.
Dodge is a New York-based firm that produces construction project data. The entire cost of a project is reported in the month in which construction begins.
Chicago’s construction starts included Blackstone Group’s $500 million redevelopment of the city’s tallest building, 110-story Willis Tower. The private equity giant is building a new base onto the West Loop tower, which will add 300,000 square feet of retail and entertainment space by 2019.
The costliest new project that kicked off was Crescent Heights’ 76-story One Grant Park luxury apartment tower near the south end of Grant Park, estimated at $650 million.
This year’s activity follows several large projects that kicked off in Chicago in 2016, including the 98-story Vista Tower hotel and condo building and the 70-story One Bennett Park condo tower.
Among other projects that started in the first half of 2017 were Greektown’s $280 million One South Halsted, a 44-story apartment tower, and an Essex Inn hotel upgrade and new apartment building to be built next door on South Michigan Avenue, with a $240 million price tag.