The demand for new commercial buildings rose dramatically over the month, boosted by recovering market fundamentals such as rents and occupancy rates.
Photo credit: McGraw Hill Construction
After a brief pause in June 2013, the Momentum Index resumed its upward trend in the most recent three months.
Photo credit: McGraw Hill Construction Dodge
The Dodge Momentum Index advanced 2.9 percent in September to 118.3 (2000=100) according to McGraw Hill Construction, a division of McGraw Hill Financial. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. After a brief pause in June 2013, the Momentum Index resumed its upward trend in the most recent three months. Since the end of 2012, the Momentum Index has risen an impressive 31 percent, and in September it reached its highest level since the first quarter of 2009. This acceleration suggests that, as of September, owners and developers viewed the environment for construction as improving.
Once again, the two main components of the Momentum Index diverged in September. The demand for new commercial buildings rose dramatically over the month, boosted by recovering market fundamentals such as rents and occupancy rates. The commercial component of the Momentum Index jumped 8.5 percent in September thanks to increased plans for new office development. Among the larger commercial projects to enter the planning phase in September were a $150 million headquarters for Daimler in Portland, Ore., a $150 million, 53-story office tower in Chicago and a $65 million office building for Public Service Electric and Gas Co in Newark N.J.
The institutional segment of the Momentum Index retreated 2.5 percent in September, as a gain for healthcare projects was offset by a larger decline in plans for amusement and education buildings.