While the Dodge Momentum Index, a monthly measure of the initial report for nonresidential building projects in planning, increased slightly in June, the notable indicator of construction project pipelines hit its 14-year high.
The Momentum Index, issued by Dodge Construction Network, increased less than one percentage point in June to 173.6 (2000=100) from the revised May reading of 173.1. The index is shown to lead construction spending for nonresidential buildings by a full year. In June, the commercial component of the Momentum Index rose 4.1%, while institutional fell 6.2%.
The increase in commercial planning was largely due to an uptick in warehouse projects, thanks to onshoring and precautionary supply chain management, said Richard Branch, Dodge’s chief economist.
“As the United States works to decrease dependence on foreign imports amid economic uncertainty in China, many companies are expanding their warehouses for U.S. production,” Branch said. “Beyond onshoring, many companies are expanding their existing storage facilities to preemptively combat future supply chain issues such as bottlenecking.”
A total of 27 projects with a value of $100 million or more entered planning in June. The leading commercial projects were the $400 million Somerset Nevele Resort in Ellenville, N.Y., and the $300 million first phase of the Ten85 warehouse building in Buckeye, Ariz.
The leading institutional projects were the $390 million 10 Twin Dolphin life science campus in Redwood City, Calif., and the $280 million expansion of the Connecticut Children’s Patient Tower in Hartford, Conn.
The increase in projects provides “a hopeful foundation for the commercial construction industry,” Branch said.
“If this trend continues, these projects themselves will create work for the coming months,” he said. “Many companies are already seeing an increase in projects as a result of the infrastructure bill. Should the construction of new warehouses and storage facilities continue, there is hope for easier access to products as a result of an improved supply chain.”
For institutional planning, a decrease in education projects in June dragged the sector lower, although healthcare increased. On a year-over-year basis, the index was 9% higher than in June 2021. The commercial component was 11% higher, and institutional was 5% higher than one year ago.
“As the possibility of a recession looms, construction, like any other industry, must be prepared for challenges,” Branch said. “Only time will tell—but it is important right now to ride the positive momentum and prepare for any possible outcome.”