The construction industry has been abandoning nonresidential and multifamily construction projects at higher rates, according to the latest data from ConstructConnect.
The Cincinnati-based firm unveiled the March report for the Project Stress Index (PSI), which leverages data from the public and private sectors to provide a comprehensive look at the construction industry. After a rise in abandonment activity last month, the index rose to 113.7, signifying a stressful trend for public and private developers.
The PSI composite measures the level of preconstruction projects that have been delayed, placed on hold or abandoned within the last month. Excluding single family home developments, the index reviews nonresidential and multifamily projects on a variety of criteria to determine the construction market’s timing, direction and amplitude.
Seasonally adjusted, the index’s ratings encompass public and private construction projects with delays to bidding dates, projects that have been placed on hold and activities that have been indefinitely abandoned.
Abandoned projects account for most of the change in this update, rising to 145.9 on the index or 9.5% in March. However, since the beginning of the year, abandonment activity has risen more than 41%.
The index indicates that the private sector is taking the brunt of abandonment activity for preconstruction projects. For every abandoned public development, approximately two private sector projects were concluded, according to the report.
The bid date delay component of the index decreased slightly in March, falling by 0.7% to an index reading of 102.6. This suggests that while some projects are still experiencing planning delays, overall activity in this category remains relatively stable.
Projects placed on hold saw the most improvement in March. The on-hold index dropped by 8.0%, falling to a reading of 92.7. On-hold activity has declined 19% year-to-date.
Municipalities around the country are in the process of creating and enacting new budgets and capital improvement programs for the upcoming fiscal year. In considering funding priorities, these municipalities could work with public and private partners to solidify funds for nonresidential and multifamily developments.
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