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Commercial planning gains steam while institutional projects retreat

BEDFORD, M.A. – June 7, 2024 — The Dodge Momentum Index (DMI), issued by Dodge Construction Network, increased 2.7% in May to 179.0 (2000=100) from the revised April reading of 174.3. Over the month, commercial planning progressed 5.5% and institutional planning slowed by 3.4%.

“Owners and developers are gaining confidence in 2025 market conditions, alongside more stable and predictable interest rates – spurring stronger commercial activity over the month,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “Conversely, after last year’s growth, institutional planning is decelerating, as high material costs, labor shortages, and elevated interest rates seep into planning decisions. The overall DMI remains 40% higher than May 2019 levels, indicating a steady pipeline of construction projects that will be ready to break ground through mid-2025.”

Data center planning supported growth on the commercial side of the index in May, alongside a steady acceleration in retail planning over the last six months. Marginal increases in project activity were also seen in hotel and warehouse planning. For the third consecutive month, healthcare and education planning activity slowed – constraining total institutional planning momentum. Public project planning activity also slackened this month, while the value of amusement planning projects has been picking up speed recently. In May, the DMI was 7% lower than year-ago levels, following an abnormally strong May 2023. The commercial segment was up 8% from year-ago levels, while the institutional segment was down 32% over the same period.

A total of 19 projects valued at $100 million or more entered planning throughout the month of May. The largest commercial project included the $500 million renovation of the former Mirage Hotel to a Hard Rock Hotel and Casino in Las Vegas, Nevada. The next two largest commercial projects to enter planning included the $495 million Prime Data Center in Fort Worth, Texas and the $481 million Prime Data Center in Garland, Texas. The largest institutional projects to enter planning were the $377 million renovation project to Neyland Stadium at the University of Tennessee and the $350 million Woodland Research and Technology Office in Woodland, California.

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.