Third Monthly Drop In A Row For Dodge CRE Index

Dodge Momentum Index, a measure of nonresidential commercial real estate activity in the nation, dropped 3% in August to 148.7 for its third monthly decline in a row.

The commercial planning component lost 2% in August, while the institutional component fell by 6%..

Dodge Data & Analytics, which produces the monthly measure, attributed the declines to rising prices for nonresidential buildings materials; a shortage of labor and a growing number of new COVID-19 cases from the Delta variant.

The downward momentum in nonresidential building planning wasn’t universal as more data center, education and warehouse projects moved into planning in August from the levels in July.

The three-month downturn belies the recovery Momentum Index has seen year-to-year of a 19% total hike with institutional planning up 17% and commercial planning 20% higher.

It is still too early to call the three-month downturn a retrenchment or a new cyclical downturn, said Dodge in the release of the August numbers. However, the firm pointed out that demand for nonresidential buildings remains weak. At the same time, it predicted that as the economy continues to trudge forward, momentum will return to the construction sector and moderate growth in projects entering planning will return.

Of 21 projects with a value of $100 million or more entered planning during August, the largest commercial projects were a pair of $165 million Google Data Centers in New Albany, OH, and Lancaster, OH with the leading institutional projects the $158 million Sentara Albemarle Medical Center in Elizabeth City, NC, and the $140 million Apex Outpatient Center in Cleveland, OH.

Earlier this season, Dodge cautioned the construction recovery may stall in the months ahead from the rising number of COVID-19 cases caused by the Delta variant along with pressures caused by higher material prices and labor which it saw as unlikely to ease anytime soon.