by Bendix Anderson

Cold weather earlier this year didn't put a brake on new construction for long.  Developers are starting more new commercial and multifamily projects than experts anticipated, even before the long, cold winter.

Leading indexes of new construction activity are firmly positive. The Dodge Momentum Index from McGraw Hill Construction, based in New York City, grew by 2 percent in May to reach 125.2, continuing a strong rebound in April from a slow beginning to the year. The index is now up 17.6 percent compared to last year.

“After weather-induced declines in February and March, the Dodge Momentum Index seems to have resumed its upward track,” said McGraw Hill. Based on the number ofdeals in the planning stage and strengthening real estate fundamentals, “nonresidential construction starts should be headed higher over the remainder of the year.”

Spending on new nonresidential construction projects has also risen slightly over the first months of the year, according to the latest data from the Census. Developers spent at an annual rate of $308.0 billion on non-residential construction in April. That’s down slightly from March, though spending on commercial construction has been up slightly for most of this year, despite the long, cold winter.

Developers keep buying land

Developers are still buying land to build on at roughly the same, very fast pace that they started last year. Buyers paid $17.4 billion for 1,619 parcels of developable land in 2013. By the last week in June, they had paid $8.3 billion for 783 properties, according to Real Capital Analytics.

The pace of land sales in 2013 was actually faster than the pace in 2007, when just 1,444 parcels of land traded. “If you look at properties trading, there were more deals in 2013 than in the peak,” says Dan Fasulo, managing director for Real Capital Analytics

However the mood among developers is still not as ebullient as it was back in the boom years. This shows in the dollar volume of properties traded in 2013, which is roughly half the dollar volume of the properties traded in 2007, even though the number of parcels was less in 2007.

Multifamily development keeps rising

Developers have been starting construction on more new apartments than experts anticipated. The seasonally adjusted annual rate of multifamily construction starts has been rising relentless up from its low point below 100,000 housing units a years since early 2010. Experts thought the rate would slow its rise after it blew past 300,000 earlier this year.

“Rather than the modest slowing anticipated for starts, the numbers are holding steady for apartments. Total multifamily construction actually goes up a bit, as we’re beginning to add some condos to the mix,” says Greg Willett, vice president of MP/F Research.

Most apartment markets should be able to handle to the supply, because demand has been rising too. “Rather than the mildly declining occupancy and slowing rent growth most expected for apartments this year, we’ve got mildly increasing occupancy and accelerating rent growth,” says Willett.

The latest forecast from CBRE Global Research has the multifamily vacancy rate rising from 4.9 percent to about 5.5 percent in 2015, remaining steady at about that rate though 2018.

“Our long-term outlook has not changed and we expect the national market to remain generally stable over the forecast horizon, with vacancy near its historical norm and rent and revenue growth slightly ahead of the long-term average and consumer price inflation,” according to CBRE.