The leading index for commercial real estate, as measured by the Dodge Momentum Index (DMI), saw a 5% decline in October 2024 from the preceding month, dropping to 197.2 from 208.2. Despite this monthly retreat, the DMI remains 13% higher than in October 2023, indicating strong year-over-year growth. The decrease was driven primarily by a 6.7% drop in commercial planning and a 2.0% decrease in institutional planning. Notably, sectors such as data centers saw normalization in planning, and several other nonresidential sectors experienced a slowdown. Conversely, hotel planning continued to rise, while educational and public planning within the institutional segment also expanded. However, declines in healthcare, recreational, and religious project planning offset these gains.
The Dodge Construction Network highlights that owners and developers remain optimistic about the market conditions going into 2025, particularly anticipating stronger construction activity following anticipated federal interest rate cuts in the coming year. The substantial impact of data centers on the index is highlighted, with adjustments showing commercial planning would be down 4% and the overall DMI down 2% from year-ago levels if data centers were excluded.
Overall, the DMI’s downtrend in October suggested a potential slowdown in commercial real estate activity in early 2025, with a recovery predicted mid-year. This index is a critical indicator, as it traditionally leads nonresidential construction spending by a year, making it an important tool for forecasting future construction trends.
