Increase Pushes Level of Planning Above Most Recent Cyclical High
A measure of nonresidential building projects, the Dodge Momentum Index provides an analysis of the construction industry. Analysists delivered some bright news recently with the announcement that the Dodge Momentum Index increased 7% in May.
The index measures data about nonresidential building projects planned, to track spending in the sector. For May, the institutional component of the Momentum Index rose 9%, and the commercial component increased 6%.
May’s reading came in at 176.2, up from April’s 165.2.
According to Dodge Data & Analytics, May’s increase in the Dodge Momentum Index pushed the level of planning above the most recent cyclical high in November 2021.
During the month of May, commercial planning was led higher by an increase in office and hotel projects. Institutional planning saw a boost in education and healthcare projects entering planning. On a year-over-year basis, the Momentum Index was 17% higher than in May 2021. The commercial component was 24% higher, and the institutional component was 8% higher than one year ago.
A total of 19 projects with a value of $100 million or more entered planning in May.
The leading commercial projects were:
• $333 million Bitcoin Mining Facility (a large computing building) in Corsicana, Texas
• $300 million Gun Lake Hotel and Resort in Wayland, Mich.
The leading institutional projects were:
• $250 million Drexel University life sciences building in Philadelphia
• $160 million Colorado Research Exchange life sciences campus in Broomfield, Colo.
Despite higher interest rates and fear of recession, nonresidential building projects continue to steadily enter the planning cycle, according to Dodge. While higher prices and labor shortages may result in projects reaching groundbreaking later in 2022 or early 2023, they provide hope that the construction sector will be able to withstand a potential economic slowdown fed by higher interest rates.