After six months of consecutive gains, the Dodge Momentum Index fell 5% to 165.8 (2000=100) in June. That was down from the revised May reading of 175.1.
Institutional planning, which fell 7%, and commercial planning, which dropped 4%, pulled down The Momentum Index, a monthly measure of the first (or initial) report for nonresidential building projects in planning. It has been shown to lead construction spending for nonresidential buildings by a full year.
Several factors thwarted momentum in May, including uncertain demand for building types facing challenges (such as retail and hotels), higher material prices and continued labor shortages.
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Despite the drop in June, the Momentum Index sits 41% higher than where it was last year and near a 13-year high. In addition, commercial and institutional planning outpaced June 2020 by 39% and 46%, respectively.
In June, 13 projects with a value of $100 million or more entered planning, according to Dodge. A $194 million data center in Dulles, Virginia, and the $109 million FedEx warehouse in Cedar Rapids, Iowa were the most significant projects on the commercial side. On the institutional side, the $300 million Mt. Edgecumbe Medical Center replacement in Sitka, Alaska, and the $200 million renovation of the New York Public Library SNFL Branch in New York City were the largest projects to enter planning.
"June's retreat in planning activity is another sign that the recovery from the pandemic-led recession will be nonlinear," according to Dodge. "The current level of the Momentum Index and its underlying components, however, continue to signal that a more broad-based recovery in nonresidential construction starts will occur in 2022."
In an earlier report, CBRE predicted a boom in commercial construction this year. Citing Dodge Data & Analytics, it said projects costing more than $50 million each will increase by at least 40% year-over-year for total completions of 430 million square feet. Multifamily projects make up most of these projects at around 45% or 194 million square feet. Warehouse projects follow at 36% or 158 million square feet. Office projects constitute 17% of the pipeline, while retail projects are just under 2%.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
