Warehouse Projects Are Barely Keeping The Construction Sector Above Water
The public side of the building market is suffering as state and local government revenues have declined.
In August, commercial building projects that are in planning rose by 3.3% while institutional building projects in planning moved 1.2% lower, according to The Momentum Index, issued by Dodge Data & Analytics, a provider of commercial construction project data, market forecasting & analytics services.
The Momentum index is a monthly measure for nonresidential building projects in planning, which has been shown to lead to construction spending. And according to the report, the index increased to 126.5 in August from the revised July reading of 124.2—a modest 1.8% increase of commercial building projects keeping the sector alive while institutional building projects continue to decline.
Eleven commercial building projects valued at $100 million or more entered planning in August. Leading the way is a UPS distribution facility in Mebane NC valued at $262 million and an Amazon distribution center (Project Star) in San Antonio TX. The leading institutional projects mentioned in the report were the $150 million BayCare South Florida Baptist Hospital in Plant City FL and the $125 million second phase of the Veterans Memorial Arena in Binghamton NY.
Institutional projects, referring to planned structures related to healthcare, education, recreation, or public works, are 34% below their recent peak and have been declining for five consecutive months with the bottom nowhere in sight. “The public side of the building market is suffering as state and local government revenues have declined, creating budget cuts across the country,” the authors write. A significant pullback in education projects entering planning places a substantial downward pressure on the institutional component of the Momentum Index.