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Dive brief:
- The Dodge Momentum Index, a benchmark that measures planning for non-residential buildings, rose 1% in October driven largely by warehouse activity, according to the Dodge Construction Network. It is the second consecutive month of positive earnings.
- September report reversed six months of contractions. This month’s sequential gain suggests the index, which peaked in December 2022 and typically leads real construction spending over 12 months, continued to build in its positive direction.
- “Increased momentum in warehouse planning activity supported the commercial side of the index this month, while muted educational planning activity dampened the institutional side,” said Sarah Martin , associate director of forecasting at Dodge Construction Network. “Overall levels of planning activity remain robust and will support construction spending over the next 12 to 18 months.”
Diving knowledge:
Martin said last month that persistently high interest rates, supply chain bottlenecks and tighter lending standards will likely continue to affect the commercial segment, such as office, retail and warehouse projects.
So while improvements in warehouse planning pushed the overall trade component up 2% in October, concerns remain about the segment’s outlook. Year over year, DMI for the commercial segment remains at 14%, according to Dodge.
In the institutional arena, which includes projects in education, life sciences and healthcare, the segment also saw a decline in planning, falling 1.4% in October, according to Dodge. However, the sector as a whole has been very resilient to market headwinds so far, Martin said. Interannually, the institutional segment remains at 7%, according to the report.
“The index’s month-to-month movement can be volatile, but trends in 2023 continue to show an overall decline in commercial projects, offset by more institutional projects entering the planning queue,” Martin said. “Business planning has been generally in decline since its peak last November, but has begun to stabilize in recent months.”
The ABI continues to drop
Meanwhile, the Architectural Turnover Index, which also provides a leading indicator for upcoming construction jobs that are nine to 12 months away, it continued to deteriorate, according to the most recent data from the American Institute of Architects. The ABI score of 44.8 is the lowest score recorded since December 2020 — during the height of the pandemic — and indicates that the proportion of businesses reporting a drop in turnover has increased significantly.
“Owners want to build, but inflation is wreaking havoc with financial proformas and forcing cost-cutting measures on many commercial projects to keep them going,” according to a 12-person firm in the Northeast cited in AIA report, both commercial and commercial. institutional specialization.
According to Dodge, a total of 21 projects valued at $100 million or more entered the planning stages in October. Larger commercial projects include:
- Google’s $215 data center in Kansas City, Missouri.
- The $180 million Mauna Kea Beach Hotel in Waimea, Hawaii.
The largest institutional projects to enter planning included:
- The $400 million Grand Sierra Resort Arena in Reno, Nevada.
- The $267 million renovation of Keller Auditorium in Portland, Oregon.
