Dive Brief:
- Project abandonments rose 10.7% in the past month, according to the Cincinnati base ConstructConnect Project Stress Indexa measure of construction projects that have been stopped, abandoned or have a delayed bid date.
- Backlog bid activity was unchanged in June, while stalled works decreased by 6.6%. Overall, the project stress index rose 1.5% last month.
- “Among abandoned projects, it’s quite possible that this number is fueled by only a few severely affected subcategories,” said Michael Guckes, chief economist at ConstructConnect. “The main suspects are the private offices that continue to struggle seriously against the current financial market conditions.”
Diving knowledge:
The latest stress data continues to emphasize the differences between public and private construction projects, Guckes said.
As for the private sector, stalled projects fell by around 11.5% year-on-year.
However, despite the general decline, Boston developers recently work on break in a life sciences project due to an oversupply of space and sluggish demand in the region, according to Banker & Tradesman. Boston-based developer Leggat McCall Properties began work in 2022, but halted activity due to market conditions.
LG Energy Solutions also last month temporarily halted part of its $5.5 billion battery manufacturing complex in Queen Creek, Arizona. The battery company linked the decision to “market conditions,” the company’s global communications team said in a statement.
Suspended public projects, which include infrastructure work, rose 5.2% from the same week a year ago, according to ConstructConnect.
Earlier this month, Amtrak’s redevelopment group put it on hiatus the $175 million redevelopment of Baltimore Penn Station, according to The Baltimore Sun. Penn Station Partners, Amtrak’s redevelopment group, put the project on hold amid cost-related delays that will likely change the final price, officials said.
Abandoned projects
Meanwhile, abandoned public projects rose 3.6 percent year over year, while private project abandonments rose 48.7 percent, Guckes said.
“Public abandonments are near 2021 levels, which is a relief from the volatile construction economy today,” Guckes said. “Unfortunately, in the private sector, abandonments continue to be a significant problem for contractors who will struggle to manage workflows and keep their teams busy while being subject to the risk of project abandonment.”
