Twin Cities construction activity grows just 1% in March

Construction gains across the Twin Cities proved lackluster in March as nonresidential building activity plunged dramatically, offsetting upticks in the housing sector, according to a Dodge Data & Analytics report released this week.

The research firm found that the value of building projects for the 13-county metro area rose just 1% to $527 million during March.

Residential construction starts were responsible for the tiny gain. New house and apartment building projects jumped 62% to $470 million during the month.

In contrast, construction starts for offices, warehouses, factories, data centers, clinics, schools, and other nonresidential building work fell 75% to $57 million.

The steep drop differs from February, when nonresidential construction in the metro region rose 9% to $113 million. That rise was mainly due to a large renovation project at the Minneapolis-St. Paul International Airport.

The mixed Dodge Data report dovetails with findings by the state of Minnesota. The Department of Employment and Economic Development agency noted that the state lost 2,115 construction jobs in March compared to the same period a year ago.

Commercial real estate experts note many office and school construction projects set for 2021 were scuttled or postponed due to the pandemic as many workers and students remain working or learning remotely. The "work-from-home" trend has caused employers nationwide to re-evaluate and downgrade their need for new office spaces and caused hotel builders to pause.

So far this year, Twin Cities home construction rose 34%, injecting $1.3 billion worth of projects into the local economy, Dodge Data reported.

Nonresidential construction, however, is off 47% so far this year, to $285 million worth of activity.

Combined, total construction projects rose 5 % so far this year, the report said.