Dodge Momentum Index Remains Flat in January

Institutional planning continues to accelerate, while commercial planning ticks down

BEDFORD, M.A. – February 7, 2024 The Dodge Momentum Index (DMI), issued by Dodge Construction Network (DCN), rose 0.1% in January to 184.1 (2000=100) from the revised December reading of 183.9. Over the month, commercial planning fell 1.0% and institutional planning improved 2.1%.

“Divergent trends between commercial and institutional planning continued in January, nullifying any growth on the overall Momentum Index,” stated Sarah Martin, associate director of forecasting for DCN. “Nevertheless, lending standards begun to loosen in January and the Fed is expected to begin cutting rates in the back half of the year. With this in mind, momentum should resume in commercial activity throughout 2024 as owners and developers gain confidence in market conditions for 2025.”

Slower growth in warehouse planning pulled down the commercial portion of the Index this month, while steady education and healthcare planning supported growth on the institutional side. Year over year, the DMI was 3% lower than in January 2023. The commercial segment was down 12% from year-ago levels, while the institutional segment was up 15% over the same period.

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.

Watch Associate Director of Forecasting Sarah Martin discuss January’s DMI here.

January 2024 Dodge DMI

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Construction Starts Hit 10-Month Low, Declining 15% in November

Nonresidential starts lead decline, dropping 29%

HAMILTON, NJ —December 20, 2023 — Total construction starts fell 15% in November, dropping to a seasonally adjusted annual rate of $927 billion, according to Dodge Construction Network. Nonresidential building starts fell 29% during the month, residential starts lost 6%, and nonbuilding starts dropped 2%.

Year-to-date through November 2023, total construction starts lagged by 4% compared to the previous year. Residential and nonresidential starts were down 14% and 7%, respectively, but nonbuilding starts were up 19%.

“Construction starts are deeply feeling the impact of higher rates,” said Richard Branch, chief economist for Dodge Construction Network. “While the Federal Reserve seems poised to start cutting rates in the New Year, the impact on starts will lag. As a result, starts are expected to be weak through the mid-point of 2024 before growth resumes.”

Nonbuilding

Nonbuilding construction starts in November fell 2%, amounting to a seasonally adjusted $223 billion. Highway and bridge starts decreased 8%, environmental public works starts fell 4%, utility/gas starts rose 17%, and miscellaneous nonbuilding starts improved by 1%.

Year-to-date through November, nonbuilding starts were up 19% overall. Utility/gas plants rose 49%, and miscellaneous nonbuilding starts increased 18%. Highway and bridge starts gained 9%, and environmental public works rose 11%.

The largest nonbuilding projects to break ground in November were the $834 million I-405 Brickyard to SR 527 improvements in Bothell, Washington, the $406 million second phase of the Sherco Solar Farm in Becker, New Mexico, and a $353 million addition to the Silverhawk Generating Station in Moapa, Nevada.

Nonresidential

Nonresidential building starts decreased 29% in November to a seasonally adjusted annual rate of $345 billion. Manufacturing starts plummeted 74% following a strong several strong project starts in October. Commercial starts fell 19% with office buildings being the only category to see a gain. Institutional starts rose 7% due to a significant uptick in healthcare activity. Year-to-date through November, total nonresidential starts were 7% lower than in 2022. Institutional starts gained 5%, while commercial and manufacturing starts fell 13% and 18%, respectively.

The largest nonresidential building projects to break ground in November were the $1.9 billion Children’s Hospital of Philadelphia Inpatient Tower in Pennsylvania, the $1.6 billion LG Energy Battery Plant in Queen Creek, Arizona, and the $750 million expansion of the Iowa Army Ammunition Plant in Middletown, Iowa.

Residential

Residential building starts declined 6% in November to a seasonally adjusted annual rate of $359 billion. Single family starts increased 1%, while multifamily starts fell 19%. Year-to-date through November 2023, total residential starts were down by 14%, with single-family starts dropping 15% and multifamily starts by 12%.

The largest multifamily structures to break ground in November were the $200 million 55 Broad Street residential conversion in New York City, the $200 million redevelopment of The Superman Building in Providence, Rhode Island, and the $185 million Union West mixed-use development in Raleigh, North Carolina.

Regionally, total construction starts in November fell in the Midwest, South Atlantic, South Central and West regions, but rose in the Northeast.

Watch Chief Economist Richard Branch discuss November Construction Starts here.

November 2023 Construction Starts

NovemberStarts

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Dodge Momentum Index Decreases 1% in November

Nonresidential planning activity remains historically elevated despite decline

HAMILTON, N.J. – December 7, 2023 The Dodge Momentum Index (DMI), issued by Dodge Construction Network (DCN), decreased 1% in November to 179.2 (2000=100) from the revised October reading of 181.7. Over the month, the commercial and institutional components both fell 1%.

“While both portions of the Momentum Index saw slower momentum in planning, overall levels remain steady and will support construction spending in 2024 and 2025,” stated Sarah Martin, associate director of forecasting for DCN. “Nonresidential planning activity will remain constrained from stronger growth amidst ongoing labor and construction cost challenges.”

Excluding data center activity, all commercial segments saw declines in November. On the institutional side, more momentum in healthcare and public projects was offset by continued weakness in education planning. Year over year, the DMI was 14% lower than in November 2022. The commercial segment was down 20% from year-ago levels, while the institutional segment was up 2% over the same time period.

A total of 17 projects valued at $100 million or more entered planning in November. The largest commercial projects include the $480 million Project Cosmo Data Center in Cheyenne, Wyoming, and the $300 million Sherwin Williams Headquarters Building in Cleveland, Ohio. The largest institutional projects include the $315 million phase two of the FSU Health Hospital in Tallahassee, Florida and the $258 million LA Convention Center Exhibition Hall in Los Angeles, 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.

Watch Associate Director of Forecasting Sarah Martin discuss November’s DMI.

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Construction Starts Drop 7% in October

The start of three megaprojects failed to overcome broad-based weakness

HAMILTON, N.J. – November 21, 2023 Total construction starts fell 7% in October to a seasonally adjusted annual rate of $1.1 trillion, according to Dodge Construction Network. Nonbuilding and residential starts fell 32% and 1%, respectively. Conversely, nonresidential building starts gained 8% during the month.

Year-to-date through October 2023, total construction starts were 4% below that of 2022. Residential and nonresidential starts were down 15% and 7%, respectively; however, nonbuilding starts were up 20%. For the 12 months ending October 2023, total construction starts were down 1%. Nonbuilding starts were 22% higher, and nonresidential building starts gained 1%. On a 12-month rolling basis, residential starts posted a 15% decline.

“Construction starts have weakened over the last two months as high interest rates and tight credit have restrained activity,” said Richard Branch, chief economist for Dodge Construction Network. “While it seems likely that the Federal Reserve will hold off raising rates further, it will take time until they consider easing. This will likely result in a continued softening in construction starts over the next several months.”

Nonbuilding

Nonbuilding construction starts lost 32% in October, falling to a seasonally-adjusted $231 billion. A decline in utility/gas starts drove category starts to a 12-month low. Miscellaneous nonbuilding stars dropped 20%, and environmental starts were 15% lower. However, highway and bridge starts improved 6% in October. Year-to-date through October, nonbuilding starts were up 20% overall. Utility/gas plants rose 52%, and miscellaneous nonbuilding starts increased 18%. Highway and bridge starts gained 9%, and environmental public works rose 13%.

For the past 12 months ending in October 2023, total nonbuilding starts were 22% higher than in the 12 months ending in October 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 56% and 15%, respectively. Highway and bridge starts were up 11% and environmental public works starts were 15% higher on a

12-month rolling sum basis. Overall, the success in nonbuilding starts prevented further declines in the overall monthly starts values.

The largest nonbuilding projects to break ground in October were the $319 million Newton-Weston bridge replacement in Newton, Massachusetts, the $300 million Cadence Solar Center in York Township, Ohio, and the $280 million Estonian Solar project in Cooper, Texas.

Nonresidential

Nonresidential building starts rose 8% in October to a seasonally adjusted annual rate of $490 billion. The increase was led by the groundbreaking of several very large manufacturing plants during the month. If not for those plants total commercial starts would have lost 28%. Commercial starts dropped 18% during the month due to a very sharp pullback in office activity, while institutional starts fell 15%, despite a solid gain in healthcare starts. Year-to-date through October, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 4%, while commercial and manufacturing starts fell 10% and 20%, respectively.

For the past 12 months ending in October 2023, total nonresidential building starts were 1% higher than that ending October 2022. Manufacturing starts were 2% higher, institutional starts improved by 5%, and commercial starts lost 4%.

The largest nonresidential building projects to break ground in October were the $7.5 billion Micron semiconductor fabrication facility in Boise, Idaho, the $2.2 billion Hyundai/LG EV battery plant in Ellabell, Georgia, and the $1.5 billion Nucor Sheet Mill in Apple Grove, West Virginia.

Residential

Residential building starts fell 1% in October to a seasonally adjusted annual rate of $385 billion. Single family starts lost 2%, while multifamily starts were flat. On a year-to-date basis through October 2023, total residential starts were down 15%. Single family starts dropped 17%, and multifamily starts were down 12%.

For the 12 months ending in October 2023, residential starts were 15% lower than in 2022. Single family starts were 20% lower, while multifamily starts were down 7% on a rolling 12-month basis.

The largest multifamily structures to break ground in October were the $364 million QPX mixed-use tower in Long Island City, New York, the $350 million mixed-use building on W37th Street in New York, New York, and the $225 million first phase of the Baccarat Residences in Miami, Florida.

Regionally, total construction starts in October fell in the Midwest, South Atlantic, South Central, and West regions, but rose in the Northeast.

Watch Chief Economist Richard Branch discuss October Construction Starts here.

October 2023 Construction Starts

 

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New Study: Project Management Information Systems Further Benefit Capital Building Programs When Applied to Multiple Processes

Improved cost predictability experienced by 61% of owners using PMIS for most of their capital management activities

HAMILTON, NJ – November 9, 2023 – New research from Dodge Construction Network and Projectmates reveals construction business owners can improve their processes and projects by using project management information systems (PMIS) beyond core functions. In the report, Building Better With Technology: How Owners Are Leveraging Software to Improve Project Management SmartMarket Brief, it is clear that most PMIS users experience many benefits. However, more owners who expand their use of PMIS compared to those with limited utilization rate their experience of those benefits at a very high level, including:

  • Better informed decisions on their projects (74% versus 39%).
  • Improved design solutions (67% versus 31%).
  • Better cost predictability (61% versus 35%).
  • Ability to mitigate design and construction risks (51% versus 30%).

“At Projectmates, we’ve witnessed the remarkable impact that a fully optimized PMIS can have on construction programs,” says Varsha Bhave, President and CTO of Projectmates. “Dodge’s survey findings serve as further validation of what we’ve long understood: the utilization of a PMIS can significantly enhance construction programs, making owners more efficient and promoting sustainability when this technology is fully harnessed.”

STRONG STRATEGY BRINGS STRONG OUTCOMES

When surveyed, owners fell into three types: those who ensured each division in their company had at least one competent PMIS user, those that centralized their PMIS expertise into a few users, and those with no strategic approach to PMIS competence. Those with a more centralized approach report the strongest results from their PMIS strategy.

  • Most of those with centralized expertise report high levels of satisfaction with the document management (78%) and schedule management (75%) capabilities of PMIS, far more than those with an unstructured approach (21% and 24% respectively).
  • A large majority of those with a strategic approach to PMIS reported the tool exceeding their performance expectations compared to those with an unstructured approach. This is particularly notable when it comes to effective document management (80% versus 53%) and risk issue tracking (71% versus 45%).

“Establishing a deliberate and strategic approach to utilizing PMIS across an organization is imperative to the success of their capital program,” says Steve Jones, senior director of industry insights at DCN. “Those who manage more of their processes in the PMIS from the start are set up to achieve more than those who take a more passive approach. Our findings reveal that by creating a specific, deliberate strategy for the means and the breadth of their PMIS implementation, owners achieve far more in the long run.”

The report contains more detailed findings and additional analysis as well as two case studies on owners’ PMIS implementation and use. It can be downloaded here.

 

About Projectmates: Projectmates, part of Hexagon, is an owner-focused, SaaS-based enterprise construction project management software provider. Projectmates’ configurable and centralized platform enables owners to keep all project documents and data within a construction program up to date in one, easily accessible location — from the planning stages through closeout and handover to the facilities team. With powerful reporting and a concise view of an entire project portfolio, owners can improve communication and collaboration with architects, engineers, and contractors to streamline workflows, control costs, and deliver projects faster.

Hexagon (Nasdaq Stockholm: HEXA B) has approximately 24,000 employees in 50 countries and net sales of approximately 5.2bn EUR. Learn more at hexagon.com and follow us @HexagonAB.

Learn more at Projectmates.com.

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Dodge Momentum Index Inches Up 1% in October

Warehouse planning projects accelerating, supporting commercial momentum

HAMILTON, N.J. – November 7, 2023 The Dodge Momentum Index (DMI), issued by Dodge Construction Network, increased 1% in October to 181.7 (2000=100) from the revised September reading of 180.3. Over the month, the commercial component of the DMI rose 2.0%, while the institutional component retreated 1.4%.

“Heightened momentum in warehouse planning activity supported the commercial side of the Index this month, while muted education planning activity slowed the institutional portion,” stated Sarah Martin, associate director of forecasting for Dodge Construction Network. “Overall levels of planning activity remain robust and will support construction spending over the next 12 to 18 months.”

Improvements in warehouse planning helped support commercial growth, but despite strong progress in September, education and healthcare activity slowed down this month. Year over year, the DMI was 8% lower than in October 2022. The commercial segment was down 14%, while the institutional segment was up 7%.

A total of 21 projects valued at $100 million or more entered planning in October. The largest commercial projects to enter planning included the $215 million Google Data Center in Kansas City, Missouri, and the $180 million Mauna Kea Beach Hotel in Waimea, Hawaii. The largest institutional projects to enter planning included the $400 million Grand Sierra Resort Arena in Reno, Nevada and $267 million renovation to Keller Auditorium in Portland, Oregon.

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

Watch Associate Director of Forecasting Sarah Martin discuss October’s DMI here.

October 2023 DODGE MOMENTUM INDEX

DMIGraphs 11.6

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Contractors Are Addressing Safety and Health Issues, But They Can Do More

The latest safety management study reveals an increase in the implementation of safety and health strategies, but those measures could have greater adoption across the industry.

HAMILTON, NJ – October 26, 2023 – Research findings released today indicate construction contractors continue to make progress responding to issues affecting worker safety and health, such as heat and mental health, but many areas for improvement remain.

The new study, Safety Management in the Construction Industry 2023 SmartMarket Report, examines occupational safety and health challenges across the industry and shines a light where more effort is needed. It was conducted by Dodge Construction Network (DCN), the industry-leading source of construction data and insight, and CPWR, a nonprofit dedicated to reducing occupational injuries, illnesses and fatalities in construction.

HEAT

Working in extreme heat is increasingly common in construction, posing significant safety and health risks to workers. To combat this problem:

  • 52% of contractors in the study report making changes at their company in the last three years to prevent heat-related illnesses onsite.
  • 66% of contractors implemented a heat-safety policy at their company.

The most common practices to address heat-related issues are providing water, rest and shade and worker training. Less common practices are monitoring the environment for heat hazards and administrative controls such as pausing work in the hottest parts of the day.

But while the data indicate progress, there are large disparities by company size.  Only 21% of employers with less than 20 employees made changes to address heat in the last three years, and another 21% of the small contractors do not consider heat stress an issue at all.

“Employers need to provide workplaces that control recognized hazards, including heat,” said Chris Trahan Cain, CPWR’s executive director. “Many firms are showing that protecting their workers from excessive heat is good for safety and good for business, but this report shows many still are not.”

MENTAL HEALTH, SUICIDE, AND OPIOID USE

When asked about topics about which they want additional training and information, such as through webinars, factsheets, infographics, and toolbox talks, the study revealed a high level of interest on worker wellbeing. Fifty-two percent of contractors wanted more resources for managing mental health, suicide, and opioid use.

The next most frequently cited topic was lifting or ergonomics, safety at 34%. This is a striking finding considering that the rest of the list consists of well-known hazards that still plague the industry.

Contractors were asked whether their company provides a program for substance use or mental health, such as access to professional services. There were major differences depending on company size:

  • 80% of large contractors (100 or more employees) offer programs for substance use or mental health.
  • Only 29% of small companies (fewer than 20 employees) offer these programs.

Strategies like having a peer network to address substance use or mental health are relatively uncommon, but more frequent among large contractors and those that employ union craftworkers.

PRE-PROJECT AND PRE-TASK ENGAGEMENT

The study also examines the use and subsequent advantages of other good safety practices on the jobsite, including during pre-construction and pre-task planning. Both strategies show the clear benefits of engaging multiple viewpoints in these processes:

  • 94% of contractors who engaged in most (7 or more) of these activities reported an increase in worker engagement with safety measures.
  • 84% of those contractors reported a reduction in recordable injury rates.
  • 60% of those contractors saw an improvement in productivity.

The study also examined other good safety practices, including the use of right-sized PPE, online training, and the use of technology. It found that one of the biggest opportunities for contractors to improve safety is to use data gathered on their projects more effectively: nearly one-quarter of the contractors who collect project safety data said they do not analyze it.

IMPLEMENTATION ACROSS COMPANIES

The study also dives into the effective implementation of safety practices among firms of different sizes, as well as ways to improve. For example, the study highlights safety measures that smaller firms could use that larger firms have already adopted. These methods include getting workers more engaged in pre-task planning and using free online tools to promote worker well-being.

“Many small companies don’t have dedicated safety managers like you would see at a larger company, so data like this is particularly valuable to help provide education about how the industry is improving worker safety, health and well-being,” says Donna Laquidara-Carr, industry insights research director at Dodge Construction Network.

Since 2012, DCN and CPWR have partnered to deliver studies on construction safety management. Previous reports examined commonly used safety practices and the corresponding benefits contractors experience from investments in safety. The Safety Management in the Construction Industry 2023 SmartMarket Report contains more detailed findings and analysis on each of these topics including feature articles and case studies illuminating how these insights can be more widely implemented across the industry. The report can be downloaded here.

 

About CPWR: CPWR – The Center for Construction Research and Training is a 501(c)(3) not-for-profit created by North America’s Building Trades Unions (NABTU). Its mission is to reduce occupational injuries, illnesses and fatalities in the construction industry through research, training, and service programs. CPWR is uniquely situated to serve U.S. construction workers, contractors and the research community, having partnered with the National Institute for Occupational Safety and Health (NIOSH) in NIOSH’s construction safety and health research initiative for three decades.

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Construction Starts Drop 6% as Fewer Megaprojects Move Forward

All three major sectors declined in September with residential leading the tumble

HAMILTON, NJ —October 18, 2023 — Total construction starts fell 6% in September to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network. Nonresidential starts lost 4%, residential starts declined 6%, and nonbuilding starts fell 9%.

Year-to-date through September 2023, total construction starts were 3% below that of 2022. Residential and nonresidential starts were down 17% and 7%, respectively; however, nonbuilding starts were up 25% on a year-to-date basis. For the 12 months ending September 2023, total construction starts were unchanged. Nonbuilding starts were 22% higher, and nonresidential building starts gained 3%. Conversely, on a 12-month rolling basis, residential starts posted a 16% decline.

“Risks continue to mount for the construction sector,” said Richard Branch, chief economist for Dodge Construction Network. “Over the last 12 months, construction starts have essentially froze as rates increased and credit tightened. The industry needs further adjusting as rates are expected to stay higher for longer, along with the potential for higher energy costs and continued political uncertainty. A return to broad-based growth in construction starts is still some time away.”

Nonbuilding
Nonbuilding construction starts decreased in September, falling 9% to a seasonally adjusted annual rate of $345 billion. Highway and bridge starts lost 15% and environmental public works starts fell 29%. Not all sectors fell, however: miscellaneous nonbuilding starts rose 4%, and utility/gas plant starts gained 14%. Year-to-date through September, nonbuilding starts were up 25%. Utility/gas plants rose 58%, and miscellaneous nonbuilding starts were up 23%. Highway and bridge starts gained 13%, and environmental public works rose 16%.

For the past 12 months ending in September 2023, total nonbuilding starts were 22% higher than that of September 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 35% and 22%, respectively. Highway and bridge starts, in addition to environmental public works starts, were both up 18% on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in September were the $4.5 billion Sun Zia transmission line across Arizona and New Mexico, the $525 million fourth phase of the Cedar Springs wind farm in Converse County, Wyoming, and the $485 million Prospect Lake Clear Water Center in Fort Lauderdale, Florida.

Nonresidential

Nonresidential building starts fell 4% in September to a seasonally adjusted annual rate of $459 billion. Commercial starts rose 6% due to strength in data center work (classified as an office structure in the Dodge database) and retail. Institutional starts fell 8% in September despite a healthy gain in education starts, and manufacturing starts declined 13%. On a year-to-date basis through September, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 5%, while commercial and manufacturing starts fell 6% and 31%, respectively.

For the past 12 months ending in September 2023, total nonresidential building starts were 3% higher than that ending September 2022. Manufacturing starts were 8% lower. Institutional starts improved by 8%, and commercial starts gained 4%.

The largest nonresidential building projects to break ground in September were the $2.5 billion Hyundai/SK EV battery plant in Cartersville, Georgia, a $1.1 billion prison in Elmore, Alabama, and the $1 billion Microsoft data center in Mount Pleasant, Wisconsin.

Residential

Residential building starts fell 6% in September to a seasonally adjusted annual rate of $394 billion. Single family starts gained 1%, while multifamily starts lost 17%. On a year-to-date basis through September 2023, total residential starts were down 17%. Single family starts were 19% lower, and multifamily starts were down 12%.

For the past 12 months ending in September 2023, residential starts were 16% lower than in 2022. Single family starts were 22% lower, while multifamily starts were down 5% on a rolling 12-month basis.

The largest multifamily structures to break ground in September were the $385 million first phase of the South Pier Residential Towers in Tempe, Arizona, the $275 million first phase of the Casa Bella Condominiums in Miami, Florida, and the $260 million Chapel Block mixed-use development in Philadelphia, Pennsylvania.

Regionally, total construction starts in September fell in the Northeast, Midwest, South Atlantic and West regions, but rose modestly in the South Central.

Watch Chief Economist Richard Branch discuss September Construction Starts here.

September 2023 CONSTRUCTION STARTS

Sept23 Starts Graphs1

Sept23 Starts Graphs2

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Dodge Momentum Index Rises 3% in September Following August Decline

Institutional planning drives DMI higher, while commercial planning declines

HAMILTON, N.J. – October 6, 2023 The Dodge Momentum Index (DMI), issued by Dodge Construction Network, improved 3% in September to 182.5 (2000=100) from the revised August reading of 178.0. Over the month, the commercial component of the DMI fell 1%, while the institutional component increased 9%.

“Solid demand for data centers, life science labs and hospitals supported the uptick in nonresidential planning activity last month,” said Sarah Martin, associate director of forecasting for Dodge Construction Network. “While month-to-month trends can be volatile, year-to-date trends show an overall decrease in commercial planning, offset by more institutional projects entering the queue. If financial conditions improve in early 2024, steady planning activity should follow.”

Weaker office planning drove the commercial segment of the DMI down, while the acceleration in the institutional segment was supported by stronger education, notably life science buildings, and healthcare planning activity. Year over year, the DMI was 5% lower than in September 2022. The commercial segment was 12% below year-ago levels, while the institutional segment was up 12% over the same time period.

A total of 20 projects valued at $100 million or more entered planning in September. The largest commercial projects to enter planning included the $400 million Platform 16 office development in San Jose, California and the $230 million Waterford Millstone Data Center in Waterford, Connecticut. The largest institutional projects to enter planning included the $927 million UC San Diego Research Park in San Diego, California and phases three and four of the Kilroy Oyster Point Life Sciences Complex in San Francisco, California, valued at a total of $634 million.

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

Watch Associate Director of Forecasting Sarah Martin discuss September’s DMI here.

September 2023 DODGE MOMENTUM INDEX

DMIGraphs 10.5

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Total Construction Increase in August Due to Influx of Nonresidential Projects

Manufacturing and transportation projects drive gains

HAMILTON, NJ —September 20, 2023 — Total construction starts rose 6% in August to a seasonally adjusted annual rate of $1.3 trillion, according to Dodge Construction Network. Nonresidential starts rose 40% thanks to a large pickup in manufacturing and transportation buildings. Residential and nonbuilding starts fell 1% and 14%, respectively.

Year-to-date through August 2023, total construction starts were 5% below that of 2022. Residential and nonresidential starts were down 18% and 9%, respectively; however, nonbuilding starts were up 22%. For the 12 months ending August 2023, total construction starts were unchanged. Nonbuilding starts were 20% higher, and nonresidential building starts gained 6%. Conversely, on a 12-month rolling basis, residential starts posted a 17% decline overall.

“Despite the August gain, the construction sector is running uphill,” said Richard Branch, chief economist for Dodge Construction Network. “Fear of an imminent recession seems to have abated, which should provide a boost of confidence to the sector. However, higher interest rates, labor shortages and significantly tighter lending standards will weigh down starts in the final quarter of the year. This will persist for the foreseeable future, lasting until interest rates start to move lower.”

Nonbuilding
Nonbuilding construction starts lost ground in August, falling 14% to a seasonally adjusted annual rate of $380 billion. The decline follows a strong July which saw the start of a $12 billion LNG project. Nonbuilding starts increased 12% in August when excluding the utility/gas plant category, which fell 45% during the month. Miscellaneous nonbuilding starts shot 39% higher, and highway and bridge starts gained 19%. However, environmental public works starts shed 1%.

Year-to-date through August, nonbuilding starts gained 22%. Utility/gas plants rose 40%, and miscellaneous nonbuilding starts were up 33%. Highway and bridge starts gained 13%, and environmental public works rose 17%.

For the 12 months ending August 2023, total nonbuilding starts were 20% higher than that of August 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 23% and 30%, respectively. Highway and bridge starts were up 17%, and environmental public works rose 18% on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in August were the $3.5 billion TransWest Transmission Project spanning Wyoming, Colorado, Utah and Nevada, the $2.9 billion Mid-Barataria Sediment Diversion projects in Port Sulphur, Louisiana, and the $1.5 billion New England Clean Energy Connect Power Line in Maine.

Nonresidential

Nonresidential building starts gained 40% in August to a seasonally adjusted annual rate of $475 billion, largely due to a surge in manufacturing activity. Nonresidential building starts would have gained 24% when excluding these large manufacturing projects. Commercial starts rose 8% in August led by gains in parking structures and hotels, and institutional starts rose 35% with all sectors but dormitories increasing. Manufacturing starts rose 285% from July to August, fueled by two large projects. On a year-to-date basis through August, total nonresidential starts were 9% lower than that of 2022. Institutional starts gained 3%, while commercial and manufacturing starts fell 8% and 32%, respectively.

For the 12 months ending August 2023, total nonresidential building starts were 6% higher than that ending August 2022. Manufacturing starts were 2% higher. Institutional starts improved 8%, and commercial starts gained 6%.

The largest nonresidential building projects to break ground in August were the $2.5 billion John Palmour Manufacturing Center for Silicon Carbide in Siler City, North Carolina, the $2 billion VinFast electrical vehicle plant in New Hill, North Carolina, and the $1.4 billion Midfield Satellite Concourse at Los Angeles International Airport in California.

Residential

Residential building starts fell 1% in August to a seasonally adjusted annual rate of $418 billion. Single family starts gained 2%, while multifamily starts lost 5%. On a year-to-date basis through August 2023, total residential starts were down 18%. Single family starts were 21% lower, and multifamily starts were down 12%.

For the 12 months ending in August 2023, residential starts were 17% lower than in 2022. Single family starts were 23% lower, while multifamily starts were down 3% on a rolling 12-month basis.

The largest multifamily structures to break ground in August were the $530 million Hub on Campus mixed-use building in Knoxville, Tennessee, the $425 million 250 Water Street mixed-use tower in New York, New York, and the $340 million Ritz Carlton residences in North Palm Beach, Florida.

Regionally, total construction starts in August rose in the Midwest, South Atlantic and West regions, but fell in the South Central.

Watch Chief Economist Richard Branch discuss August Construction Starts here.

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