February 9, 2024
New Project Planning Shows Marginal Increase
$200+ million projects enter planning stage in Colorado, Kansas and Texas
The Dodge Momentum Index (DMI), a barometer for nonresidential building project planning in the U.S., witnessed a marginal increase in January 2024, signaling a stagnant pace in the construction sector's growth prospects. According to the Dodge Construction Network, the DMI edged up by 0.1% to 184.1 in January, from a revised figure of 183.9 in December, based on the 2000=100 index scale.
The nuanced movement within the index reflects divergent trajectories between its two main components: commercial and institutional planning. While institutional project planning exhibited a 2.1% increase, indicative of a robust pipeline in sectors like education and healthcare, commercial planning conversely saw a 1.0% decline, largely attributed to a deceleration in warehouse project initiations.
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Contrasting Sector Dynamics
Sarah Martin, Associate Director of Forecasting at DCN, highlighted the dichotomy in growth patterns, noting that the opposing trends between commercial and institutional planning essentially neutralized overall progress in the DMI. However, Martin remains optimistic about the commercial sector's rebound, citing easing lending standards and anticipated Federal Reserve rate cuts in the latter half of 2024 as potential catalysts for renewed momentum, particularly with an eye towards 2025 market conditions.
Year-over-year analysis further delineates the stark contrast between the two segments, with the commercial sector down 12% from January 2023 levels, juxtaposed against a 15% uptick in institutional project planning over the same period.
Noteworthy Projects Enter Planning Stage
A total of 15 projects valued at $100 million or more entered planning in January. The largest commercial projects included the $200 million renovation of the historic Magnolia Hotel in Dallas, Texas, and the $169 million Microsoft Data Center in Leesburg, Virginia. The largest institutional projects included the $224 million NREL laboratory in Golden, Colorado and the $223 million Wichita State University Biomedical building in Wichita, Kansas.
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.
