Commercial Real Estate Entering Planning Stage Dips

(Illustration courtesy of Dodge Construction Network)

The Dodge Momentum Index fell 8.6% in March to 164.0, and commercial properties entering the planning stage dipped 3.2%, according to the Dodge Construction Network, Bedford, Mass.

Over the month, institutional properties entering the planning stage dropped 17.2%, the report said.

“In 2023, commercial planning decreased while institutional planning notably improved, sitting 29% above year-ago levels in February 2024,” said Sarah Martin, associate director of forecasting for Dodge Construction Network. “While strong market fundamentals should support institutional planning this year, this side of the index is more at risk for a substantive correction after last year’s growth.”

Martin said much of the decline on the institutional side comes from lower levels of education planning. “The surge of lab construction in recent years may lead to decreased planning demand as the market absorbs new supply in 2024. Likely, lower lab volumes will result in education planning returning to its long-run, and more sustainable, average,” she said.

The report said slower growth in office and hotel planning pulled down the commercial real estate portion of the index once again. The commercial segment was down 14% from a year ago, while the institutional segment was down 10% over the same period. The largest commercial projects entering the planning stage in March included the $215 million Microsoft Data Center in San Antonio and the $158 million Melrod Data Center Building B in Fredericksburg, Va.