Construction spending was down in South Florida during March and on a year-to-date basis, according to the latest Dodge Data & Analytics report.
So far this year, overall construction starts have declined 18 percent to $2.63 billion from $3.21 billion compared to the previous year. While nonresidential starts were up 16 percent to $1.36 billion from $1.18 billion, residential starts declined by 38 percent to $1.27 billion – from more than $2 billion for the first three months of 2016.
March 2017 saw year-over-year declines in both sectors. In January and February, commercial construction increased compared to the previous year, but in March, it fell by 3 percent to $647 million, from nearly $679 million in March of last year. And residential construction dropped 39 percent last month, to $530 million from $867 million, according to Dodge Data.
At the current pace, construction spending could post an overall decline in 2017. Last year, construction starts in South Florida totaled $10.9 billion, marking a 3 percent increase from the previous year.
Construction financing, especially for condo and hotel projects, is difficult to come by at this stage in the cycle. But a new bipartisan House bill wants to overhaul an Obama-era financial regulation and make it easier for banks to fund development projects. Currently, developers who want to secure a construction loan from a bank need to contribute at least 15 percent of a project’s value in cash.
The bill, co-sponsored by Reps. Robert Pittenger (R-NC) and David Scott (D-GA), would allow developers to count a property’s appraised value – not the cash invested – against the 15-percent threshold, plus it would allow developers to withdraw funds from the project if the property’s value appreciates, as long as the threshold is met, among other provisions.