Pointers at Glance
- According to the Dodge Construction Network, the Dodge Momentum Index, a benchmark for nonresidential building planning, increased by 3.8% in November due to healthy growth in hotel and data centre projects.
- The index usually leads to actual construction spending by 12 months.
Demand for hotel and data centre projects improved the commercial component of the momentum index by 4.3%. According to the report, modest growth in stores and office projects also helped increase the commercial sector simultaneously.
The institutional component remained net-positive in November though there is slower growth in education and healthcare projects, as per the report. The institutional category increased by 2.7% in November due to planning projects for government administrative buildings and religious facilities.
Sarah Martin, a senior economist for Dodge, said that the reduced rate of increase in the Dodge Momentum Index suggests slower planning activity in the next 12 months. That aligns with Associated Builders and Contractors’ recent analysis of sluggish nonresidential construction spending.
According to a report from New York City-based commercial real estate advisory firm Newmark, Dodge pegs commercial starts, like retail, office, warehouse, and hotel projects, are to fall 13% in 2023 when regulated for inflation, led by pullbacks in the warehouse and office sectors. Macroeconomic challenges, including technology sector slowdowns, will likely cause overall office sector investment to slow further.
As per the Dodge release, a total of 21 projects with a value of $100 million or more entered planning in November. The leading commercial projects consist of two $500 million segments of a Facebook data centre in Sandston, Virginia, and the $400 million Sunset Industrial Park warehouse in Sunset Park, New York.
The top institutional projects were the $185 million Hollywood Casino relocation in Joliet, Illinois, and the $160 million Smith County courthouse in Tyler, Texas.