The Dodge Construction Network’s index of nonresidential projects moving into the planning stage declined a modest 4.2 percent in September to 208.6, but was still strong, an analyst at Dodge.
The latest monthly Dodge Momentum Index (DMI), released on October 7, showed that commercial project planning fell 7.8% in September, but institutional planning rose 5.2%.
Sarah Martin, associate director of forecasting at Dodge, said: “Despite the drop in September, the momentum index “remains at very robust levels.”
Martin said in a statement: “A pick-up in data center activity drove much of the recent rapid growth in DMI, so planning for this sector moderated over the course of the month, overall business planning stepped back.”
He added that by the middle of next year, the Federal Reserve’s interest rate cuts “should push planning projects to innovation faster, leading to stronger non-residential activity as which advances to 2025”.
Commercial planning activity “generally receded” in September, Dodge said, with planning slowing in the warehouse, office and retail sectors.
On the bright side, hotels “have been picking up speed” in recent months, “steadily expanding” in September,” Dodge said. Data centers were still well represented among large projects, “but the the rate at which planning projects entered the queue continued. to moderate from the above-average growth levels of recent months,” Dodge noted.
In the institutional category, the main planning growth occurred in the education, healthcare and leisure market segments.
Dodge also said 28 projects valued at $100 million or more entered the planning phase in September. Among the largest commercial projects were the $390 million Project Nova Data Center in Eagan, Minnesota; and Phase 1 and Phase 2 of the SNA data center in Cedar Rapids, Iowa, which was valued at $375 million per phase.
The largest institutional projects included the $300 million Kairos Power R&D lab and the second phase of the $215 million redevelopment of the Kentucky Exposition Center in Louisville.
Dodge said its momentum index was an indicator of construction spending on non-residential buildings 12 months into the future.
