2. 2
1. US Construction Statistics
2. California Construction
3. Local Construction
4. Local Real Estate
Table of Contents
3. Annual Rate of Construction
Spending US (Billions)1
Public ($) Private ($) Total ($)
2006 255.4 882.6 1116.8
2007 289.1 858.8 1147.9
2008 319.6 768.6 1077.5
2009 308.7 591.6 906.5
2010 314.9 505.3 809.25
2011 303.9 501.9 788.3
2012 279.3 571.1 850.4
2013 270.7 635.6 906.3
2014 276.1 729.5 1005.6
2015 290.3 823.3 1113.6
2016 287.0 898.7 1185.6
2017 279.8 950.7 1230.5
3
1Numbers come from December Annual Construction Report for the US Census Bureau, except for 2017 numbers which came from
the November Report. Dollars are counted valued as construction put in place.
4. United States
Construction Starts ($ Billions)
(McGraw Hill)
In billons 2016
Actual
2017
Estimate
2018
Forecast
% change 16-17 % change
17-18
Total Construction 721.246 746.500 765.225 +3.5% +2.5%
Residential 296.308 308.950 322.100 +4.3% +4.3%
Single Family 201.144 219.825 239.950 +9.3% +9.2%
Multifamily 95.164 89.125 82.150 -6.4% -7.8%
Nonresidential 250.207 275.450 281.725 +10.1% +2.3%
Nonbuildings 174.731 162.100 161.400 -7.2% -0.4%
4
ENR Magazine, November 20, 2017, p 9
5. FMI Construction Put In Place
Forecast 2018 ($ Billions)
In billons 2016
Actual
2017
Estimate
2018
Forecast
% change 16-17 % change
17-18
Total Construction 1,185,684 1,236,447 1,301,095 +4.3% +5.2%
Total Residential 473,161 522,454 556,827 +10.4% +6.6%
Total
Nonresidential
472,366 482,480 507,583 +2.1% +5.2%
Non-buildings 240,157 231,51 236,686 -3.6% +2.2%
5
ENR Magazine, November 20, 2017, p 9
6. Dodge Construction
National Growth Forecast
6
Annual % Change for $Volume of
Construction Starts
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
+12.0 +10.0 +6.0 +5.0 +2.0 +5.0 +12.0 +13.0 +3.0 -7.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
-13.0 -24.0 +2.0 +1.0 +12.0 +11.0 +10.0 +11.0 +1.0 +4.0 +3.0
ENR Magazine, November 20, 2017, p 8
7. Dodge Construction
US Outlook-2018
• Total Construction up 3% in dollars to $762.5 Billion
• Multi Family Housing down 8% in dollars & 11% in units.
• Single Family Housing up 9% in dollars & 7% in units
• Commercial Buildings up 2% in dollars in 2018 after a 21% increase in
2016
• Public Works up 3% in dollars.
• Electric Utilities down 13% in dollars
• Institutional Buildings up 3% in dollars after 14% up in 2017
• Manufact. Plant Construction down 1% in dollars after 27% up in 2017
Data based on Construction Starts
7
Construction Business Owner, January 2018 p. 38
8. Pattern of US Construction
Starts 2012-2018 (in billions $)
Dodge 2018 Construction Outlook
2012 2013 2014 2015 2016 2017 2018
Total
Construction
492.9 547.4 607.0 684 721.2 746.5 765.2
Single Fam
Housing
125.8 159.2 163.8 186.2 201.1 219.8 240.0
Multi Fam
Housing
40.8 51.8 70.7 87.7 95.2 89.1 82.1
Commer.
Build
55.3 67.6 84.2 92.3 111.8 114.6 117.4
Instit. Build 91.8 92.1 105.1 108.2 118.5 135.5 139.2
Manuf.Build 13.1 19.4 35.8 25.1 20.0 25.4 25.1
Pub. Works 112.3 127.4 122.3 127.0 128.5 130.1 133.4
Elec.
Utilities
53.8 29.9 25.1 57.4 46.2 32.0 28.0
8
Dodge Data and Analytics November, 2017
9. National Development
Profile
West Midwest Northeast South Nat. Average
48.4 50.4 46.9 54.0 49.1
9
The further the index is from 50, the larger the number of firms reporting the change
Index <50- Architectural Firms are reporting decrease in billings
Index=50 –Architectural Firms are reporting no change in billings
Index>50- Firms are reporting an increase in billings
JLL Construction Outlook, Q3 2017 p. 15
West Midwest Northeast South
Q3 2016 6.66 8.33 7.6 10.7
Q3 2017 6.61 7.61 10.21 11.32
Construction Backlog Indicator (in months)
ABC Press Release, P. 2, 12/11/2017
10. California Building Permits
2017 through December
10
New Commercial New Industrial Alters/Additions
$9,611,110,228 $1,787,578,392 $12,493,447,987
New Other Total Non Residential Total All Construction
(including Res)
$4,623,494,917 $28,515,613,524 $63,480,403,107
Information from the California Building Industry Foundation. 2017 data is through December 2017
Single Family Valuation New Multi Family
Valuation
Residential Alterations
&Additions
$15,647,989,308 $9,625,754,401 $6,484,010,782
11. Housing Production in CA
2004-2017
212960
208972
164280
113034
64962
36421
44762
47343
59225
85472
85844
98233 100961
108227
0
50000
100000
150000
200000
250000
New Housing Units
2004 2005 2006 2007 2008 2009 2010
2011 2012 2013 2014 2015 2016 2017
11Information from the California Building Industry Foundation. 2017 data is through December 2017
12. San Jose, Sunnyvale, Santa Clara
Construction Starts
In millions ($) 2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Forecast
2018
Forecast
Total
Construction
4,302 6,111 3,648 4,268 4,769 4,977
Residential 1,154 1,449 1,449 1,230 1,858 1,573
Non
Residential
1,603 4,376 1,705 2,451 2,431 2,691
Comm/Manuf 737 3,839 1,301 1,740 1,386 1,658
Office/Bank 347 3,086 744 1,118 693 933
Institutional 1,427 537 404 712 1,045 1,033
Nonbuildings 983 410 494 587 480 713
12ENR Magazine, November 27/December 4, 2017, p CA4
13. San Jose, Sunnyvale, Santa Clara
Short Term Outlook,
County Profile
13Eberhard School of Business, 2017 Fall Metro Report, California Center for Jobs and the Economy
• Total annual non-farm employment expected to grow 1.7% in 2017 and 1.9% in 2018.
• Construction Employment expected to decrease in 2017 1.0%
• By 2021, the average annual wage may reach $148,131;
• By 2021, the population will reach 2,051,195
• Labor Force expected to decline by 0.1% in 2017;
• Unemployment is expected to fall to 3.3%
• 8,154 housing starts are expected in 2017
• Leading sectors for employment growth are –Information, Leisure and Hospitality, Education and
Health Services and Non Manufacturing.
• Population- White 32.8%, Asian 33.9%, Hispanic 27.7%,Native-Am.2%, Af. Am 2.2%
• Age-16-19 yrs 6.1%,20-24 yrs. 7.5%, 25-64 yrs 68.7%, over 65 17.4%
• Education- <High School 13%, High school 15.2%, Some College 23.9%,College 47.9%
As of Oct. 2017
3.0% Unemployment vs. 4.7% Statewide 68.6% Labor Participation Rate vs. 62.8% Statewide
30,000 unemployed, 4th Lowest in State 1 million in Labor Force, 5th Largest in State
14. San Jose, Santa Clara, Sunnyvale
Construction Starts 2011-2018
2377
4153 4213
6111
3648
4268
4769 4977
0
1000
2000
3000
4000
5000
6000
7000
Total Construction
Total Construction, in Millions
2011
2012
2013
2014
2015
2016
2017
2018
14
Engineering News Record San Jose Reports-2011-2018
(2017 and 2018 are forecasted numbers)
15. Santa Clara County Privately Owned
Housing Units Authorized
15
Year 2012 2013 2014 2015 2016 2017
Totals 5661 7734 9861 6318 6127 7872
1 Unit 1513 1891 1867 1954 2057 2428
2 Units 28 32 10 18 16 12
3 and 4 Units 62 107 129 103 110 58
5 Units or More 4058 5704 7855 4243 3944 5374
# of structures
with 5 units+
78 163 163 142 107 147
1Census Bureau Statistics, through November 2017
16. Santa Clara County Privately Owned
Housing Units Authorized-Valuation in
Thousands of Dollars
16
Year 2012 2013 2014 2015 2016 2017
Totals 1,081,862 1,649,709 1,859,331 1,485,555 1,282,793 1,750,224
1 Unit 552,474 686,793 637,506 728,611 766,746 803,699
2 Units 7,364 6,083 3,707 4,583 3,815 1,566
3 and 4 Units 14,115 24,988 28,804 43,368 24,109 15,071
5 Units or More 507,909 931,845 1,189,314 728,993 488,123 929,888
1Census Bureau Statistics, through November 2017
17. Santa Clara County
Real Estate Trends-Retail
• Development will complete 600,000 sq. ft in 2017
• 900,000 sq. ft underway-led by The Village at San Antonio
Center
• Vacancy Rate down slightly to 5.2%. Vacancy in MV/LA 2.4%
Vacancy in Morgan Hill/Gilroy 4.1%
• 3.2% decrease in asking rent to $32.39 per sq.ft. per year
17
Marcus & Millichap San Jose Metro Area Retail Research Report
3rd Quarter 2017
18. Santa Clara County
Real Estate Trends-Commercial
• 5.6 million sq. ft. underway now.
• Total proposed development of 70.0 million sq.ft.
• 2.2 million spec. sq. ft underway, with 1.9 million not spoken for
• Historical average commercial vacancy is 12.25%-currently at 9.1%
• Total available space has increased 21.2% year over year for all types.
• Office Space Availability increased in 2017 by 5.7 million sq. ft.
• Annual Rate of Commercial Vacancy- Office 13.7%
Industrial 8.7% R&D 3.4% All higher than in 2016
• Highest Rent Increases in 2018-Industrial 8 to 12%
18
Colliers San Jose Metro Area Commercial Research Report 3rd Q 2017
2018 Silicon Valley Index, p. 40
San Jose Business Journal, Feb. 23, p.22
19. Santa Clara County
Real Estate Trends-Multi Family
• 6,370 units are being finished in 2017.
• Vacancy at 3.6%
• Effective rents will climb 5.3% to $2,619 per month.
• 30,000 Housing Units to be completed over the next 5 years
in the Bay Area moving total inventory to 482,000. 60% of
the units to be completed by the end of 2018.
19
Marcus & Millichap San Jose Metro Area Apartment Research Report
3rd Quarter 2017
20. Santa Clara County
Real Estate Trends-Residential
• 12,021 residential building permits in 2017 vs 6,682 in
2016. The recent peak was 11,529 in 2014
• 7% of the new res. units were affordable for the last 2 years.
• Since 2007 Silicon Valley has created a housing shortage of
31,253 units, to accommodate the growing population.
• Ave. Household size is increasing due to high housing cost.
20
2018 Silicon Valley Index, p. 58-61
21. Santa Clara County Construction
Employment-Annual Average
In Thousands
43.0 44.5 46.8 47.5
44.5
34.6 32.4 31.8
34.8
37.5 39.7
43.9
48.6 48.2
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
21
Bureau of Labor Statistics-San Jose, Santa Clara, Sunnyvale Statistical Area
November 2017 is 50,000
Peak Employment is September 2000-52,200
23. 23
Other Trends
•Insurance claims from last fall’s deadly California Wildfires have reached
$11.8 billion. 1
•About 35,000 new Construction jobs are anticipated in each of the next 3
years, just below a 4% annual growth rate. California population growth rate
has declined to 0.7 percent and is projected to remain below 1 percent due to
lower birth rates, immigration and hosing costs. The state will add about
280,000 residents in each of the next few years, notably fewer in the past.2
•More new Silicon Valley Commercial Space has been constructed over the
past three years (more than 18 million square feet) than during the previous 13
years combined (14.9 million total between 2002 and 2014) 3
1 San Jose Mercury News, p. B6
2 Eberhardt School of Business, Fall 2017
3 2018 Silicon Valley Index, p.40
24. Conclusions
24
The US Construction Industry has moved into a mature stage of
Expansion. Along with labor constraints, commodities and
materials pricing will continue to have an impact on the
construction industry in 2018 and the years to come. As materials
and commodities prices continue to rise, it will be interesting to
see if construction firms continue to make do with lower profit
margins or if they attempt to increase building costs to meet
demand. (Robert Murray, Dodge Data and Analytics, October
2017)