12 Major Markets Where Commercial and Multifamily Construction Is on the Rise

Rising interest rates and an emerging recession have already slowed down one very important part of the real estate market: single-home sales. But two other segments -- multifamily and commercial -- appear to be faring fine so far.

According to the Dodge Construction Network (DCN), the value of construction starts in those two sectors rose by 24% in the first six months of this year over last year in the nation's 20 largest markets.

Eight metro areas posted year-over-year (YOY) declines in construction starts: Seattle; Los Angeles; Philadelphia; Boston; Chicago; Minneapolis; Nashville, Tennessee; and Kansas City, Missouri. Here's a look at the 12 that are up YOY in commercial and multifamily construction starts for the first half of 2022.

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The DCN values commercial and multifamily starts in the first half of the year at $15.3 billion in the New York City metro area. Being the nation’s biggest market gives it a head start in raw numbers, of course, but that’s still a healthy 20% jump over the first six months of 2021. Everyday investors might consider a real estate investment trust (REIT) like S.L. Green (NYSE:SLG) to make their stake in the Big Apple market.

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The Dallas, or "Big D," metroplex is one of the nation's hottest markets for multifamily growth, helping it place second in the DCN rankings. Commercial and multifamily construction starts in the first half of this year were valued at $8.1 billion. That's up 72% from the first half of 2021.

Construction starts have been turning in a capital performance in and around the District of Columbia so far this year. The DCN says commercial and multifamily starts were valued at $5.5 billion, up 35% from this point last year. And it’s not just government. Amazon (NASDAQ:AMZN) is building its second headquarters in D.C., and the spin-off should be considerable.

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A YOY jump of 31% to $4.5 billion in construction starts places Miami fourth on this list of markets with YOY growth in commercial and multifamily construction starts. As one of our country's major international crossroads, the metro area already has about 6.2 million residents and just keeps growing, as do its retail, multifamily, and logistics markets.

Austin, Texas, has been a boomtown for years now, with an influx of major technology companies of all kinds driving unprecedented growth up and out. DCN data shows a 70% gain in YOY commercial and multifamily construction starts valued at $4.3 billion in the first half of this year.

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The Valley of the Sun is another red-hot market for this kind of construction. The DCN says the Phoenix metro saw $4.2 billion in commercial and multifamily building starts from January through July of this year. That’s a robust 53% over this point last year.

There were about 26,000 multifamily units under construction in the Atlanta metro at mid-year. That surge helped drive a 68% increase to $4.2 billion in multifamily and commercial construction, making Hotlanta number seven in this list of the nation’s hottest large markets for these kinds of builds based on YOY growth.

The sprawling Houston market is Texas big, with a metro population of more than seven million and a city itself of about 2.3 million, making it America’s fourth-largest and growing. Real estate investors see plenty of opportunities here, too, driving commercial and multifamily starts up 20% YOY to $3.2 billion. Camden Property Trust (NYSE:CPT) is a major apartment owner-operator here.

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The Denver market keeps hitting Rocky Mountain highs. Lifestyle and job opportunities have helped drive population growth by 17% in the past decade along Colorado’s Front Range. Builders large and small, meanwhile, created $2.8 billion in commercial and multifamily starts in the first half of this year, a 29% jump over the first six months of 2021.

Orlando is more than just theme parks, although that's a very big business, indeed. However, more than 80% of this booming market's jobs are from outside the hospitality and tourism trade.

Advanced manufacturing, biotech, and much more are helping drive strong population growth and construction aimed at providing homes, shopping, and space to work. The DCN tracked $2.6 billion in multifamily and commercial construction starts so far this year in the big Central Florida market, up 66% from the first half of 2021.

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Builders of office, retail, multifamily, and warehouse spaces helped spur $2.5 billion in construction starts from January through July in Tampa, Florida. That’s an 83% jump YOY, helping to maintain the Tampa Bay area’s status as one of the nation’s most flourishing real estate markets.

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Do you know the way to San Jose? A lot of new construction money did in the first half of 2022, committing $2.1 billion to commercial and multifamily starts, a resounding 186% over the first half of 2021, according to DCN.

That’s despite being one of the nation’s most expensive real estate markets. The heart of Silicon Valley is apparently still beating.

For this purpose, the DCN considers commercial construction to include office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing.

Major investors in these sectors are confident in these markets, even with labor and supply issues adding to inflationary pressures and recession fears. Everyday folks can follow their leads through strategic investments in such equities as real estate investment trusts (REITs).

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Marc Rapport has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Camden Property Trust. The Motley Fool has a disclosure policy.