This audio is automatically generated. Please let us know if you have any comments.
Dive brief:
- The Dodge Momentum Index, a benchmark that measures non-residential construction planning, rose 0.1% in January amid weakness in commercial construction, according to the Dodge Construction Network. While commercial planning fell 1% over the month, institutional planning, which includes education, life sciences and healthcare projects, improved 2.1%.
- The momentum will likely pick up this year as long as the Federal Reserve follows through on rate cuts in the second half, said Sarah Martin, associate director of forecasting at the Dodge Construction Network.
- “Divergent trends between commercial and institutional planning continued in January, nullifying any growth in the global momentum index,” Martin said. “However, lending standards began to loosen in January and the Fed is expected to begin cutting rates in the back half of the year.”
Diving knowledge:
As expectations grow that the Fed will cut rates later this year, homeowners and developers will continue to gain confidence in market conditions in 2024 and 2025, Martin said in the report.
This should boost trading activity in the second half of the year.
For now, though, business planning continues to be challenged for a strict financing landscape.
Slower growth in warehouse planning weighed on the commercial side of the index in December, while steady growth in education and healthcare planning boosted the institutional side, the report said.
Year-on-year, DMI fell 3% less than in January 2023. Meanwhile, the commercial segment fell 12% from a year ago, while institutional projects rose 15% in the same period, the report said .
Architectural billings remain smooth
Along with the DMI, the Architectural Turnover Index, a leading indicator for nine-to-12-month construction work, remained below a score of 50, indicating worsening business conditionsaccording to the most recent data from the American Institute of Architects.
Design firm billings declined in every region of the country except the Midwest in December, where they were largely unchanged, the report said.
Business conditions also remained weak for most of the year at companies across all majors, particularly companies in the multifamily residential space. Firms with an institutional focus posted increases in the second quarter, but billings also weakened at the end of the year, the report said.
A total of 15 projects valued at $100 million or more entered planning in January, according to Dodge. Larger commercial projects include:
- The $200 million renovation of the historic Hotel Magnolia in Dallas.
- Microsoft’s $169 million data center in Leesburg, Virginia.
The largest institutional projects to enter planning included:
