Office, Hotel Projects Boost Commercial Planning Index

Commercial and institutional planning trended upward during October as a total of 15 projects with a value of $100 million or more entered planning that month.

This commercial planning was bolstered by a solid increase in office and hotel projects, which bolstered commercial property planning. It led the Dodge Momentum Index (DMI), issued Nov. 7 by Dodge Construction Network, to improve 9.6% in October from its revised September reading.

During the month, the DMI continued its steady ascent, with the commercial component rising 13% and the institutional component ticking up 2.9%.

The institutional component was varied, experiencing growth in recreational and education projects, countered by a decline in the number of healthcare and public planning projects, according to the report.

On a year-over-year basis, the DMI was 28% higher than in October 2021, the commercial component was up 29%, and institutional planning was 25% higher.

The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.

Nevada Resort is Priciest Project

The leading commercial projects included a $206 million expansion to the M Resort in Henderson, Nev., and the second phase of the $180 million 1416 Dodge Office Towers in Omaha, Neb.

The leading institutional projects consisted of the $500 million uCity Square Lab & Office Complex in Philadelphia and the $294 million life science R&D laboratory complex in San Carlos, Calif.

“The sustained upward trajectory in the DMI shows optimism from owners and developers that projects will continue to move forward, even with rising concerns of an economic recession,” Sarah Martin, senior economist for Dodge Construction Network, said in prepared remarks.

“Specific nonresidential segments, such as data centers and life science laboratories, have thrived in 2022 and continue to support strength in planning activity.

“As we move into next year, however, labor and supply shortages, high material costs and high interest rates will likely temper planning activity back to a more moderate pace.”

Construction Costs Keep Rising

GlobeSt.com reported this week that pandemic-era construction pricing challenges are far from over.

Justin Brown, President and CEO, Skender, said that he continues to see cost increases and volatility in materials, labor and technology.

“Despite some recent easing, nonresidential construction input costs are up 16% from a year ago and 41% since the start of the pandemic,” Brown said.

Supply chain issues have driven up lead times for many essential materials. Glass, curtain wall, roofing, metals, resins, mineral wool and electronic components, such as electrical panels, air handling units, electrified door hardware and card readers, have all been mired in delays up to 10x the normal delivery time, according to Brown.