November planning index drop signals slower commercial planning

by Christopher Brinckerhoff | December 19, 2024 6:00 am

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The Dodge Momentum Index (DMI), issued by Dodge Construction Network, decreased 2.3 percent in November to 191.5 from the revised October reading of 196. More than the month, commercial planning fell 4.6 percent while institutional planning improved 2.5 percent.

“Throughout 2024, we’ve seen robust growth in nonresidential planning activity – but labor shortages and high construction costs have prevented those projects from moving through the planning process at a normal pace. The current backlog may be constraining demand for commercial planning in the short-term,” says Sarah Martin, associate director of forecasting at Dodge Construction Network. “Uncertainty more than new tariff and immigration policies under President-elect [Donald] Trump’s administration may also generate some pause with developers, although it’s a bit too early to tell if that’s the primary factor here. Overall, easing monetary policy will help alleviate the backlog of projects in the planning queue throughout 2025 and spur more demand for projects in the coming months.”

On the commercial side, slower data center, office, warehouse, and retail planning drove much of this November’s decline, while strong growth in education planning informed much of the growth on the institutional side. The institutional portion of the DMI has grown in five of the last six months.

In November, the DMI was 12 percent higher than year-ago levels. The commercial segment was up 13 percent from November 2023, while the institutional segment was up 8 percent more than the same period. The influence of data centers on the DMI this year has been substantial. If we remove all data center projects in 2023 and 2024, commercial planning would be down 6 percent from year-ago levels, and the entire DMI would be down 1 percent.

A total of 17 projects valued at $100 million or more entered planning throughout November. The largest commercial projects included the $350 million Bally’s Hotel Tower and Casino in Las Vegas, Nevada, and the $312 million Accokeek Data Center in Stafford, Virginia. The largest institutional projects to enter planning were the $465 million student dormitory at UC Berkeley, California, and the $323 million Intensive Treatment Tower at Texas Health Presbyterian in Plano, Texas.

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

Source URL: https://www.metalarchitecture.com/news/industry-news/planning-commercial/

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