For the first time in 2020, the commercial real estate market has shown an increase in momentum, with the number of planned projects on the rise.
The Dodge Momentum Index rose 3.4% in July to 124.7, up from 120.5 in June. The monthly index, issued by Dodge Data & Analytics, measures the first report of a nonresidential building project in planning, serving as an indicator of construction spending for the full year.
The growth in July was led by the commercial sector, which saw an increase of 5.3% in planned projects, while the institutional component of the index remained unchanged.
The Momentum Index has lost 18% since December 2019, with the bulk of the decline coming in April when the COVID-19 pandemic ravaged the U.S. economy.
But the bulk of the pullback has come from the institutional side, with state and local governments bringing in less tax revenue to use for construction projects. The institutional component is down 28% from its December 2019 peak and is 21% lower than a year ago. Commercial planning, on the other hand, is down just 13% from its January 2020 peak and is actually 1% higher than a year ago, Dodge reported.
July saw 13 projects with a value of $100 million or more enter the planning stages, according to the Dodge report. Some of the leading commercial projects were the first two phases of the Centene Healthcare headquarters in Charlotte, North Carolina, with each phase valued at $500 million. The leading institutional projects were the $320 million Dignity Health Hospital in Elk Grove, California, and the $155 million first phase of the West Henderson Hospital in Henderson, Nevada.