Denver

Continued from above

While the Dodge Momentum Index, which benchmarks nonresidential construction planning, slipped 4.2% in September and 5.3% in October to close the quarter, economists there remained upbeat on starts increasing in early 2025 as interest rate cuts begin to stimulate projects through the planning process.

Despite the decline (influenced by a normalization in data center planning, which surged in the first half of the year), the index remains at robust levels, said Sarah Martin, associate director of forecasting at Dodge Construction Network, who noted that the index closed the quarter 13% higher than October 2023.

“Owners and developers remain confident in next year’s market conditions,” Martin said, “and the planning queue remains poised to spur stronger construction activity in 2025, following deeper rate cuts by the Fed.”

Although the Associated Builders and Contractors likewise reported a slight decrease in the average construction backlog in October, the year-over-year backlog remains unchanged at 8.4 months. Additionally, contractor confidence in both sales and staffing conditions has improved.

“Like much of the economy, the construction industry remained in some semblance of a holding pattern in October as project owners waited for election outcomes and for interest rates to decline further,” said ABC chief economist Anirban Basu. “Despite this wait-and-see attitude, contractors remain upbeat about the next two quarters.”

In the Denver market, backlog for the third quarter was bolstered by public sector project commitments, and construction in the healthcare sector appears poised for a bounce back to robust activity.

The quarter also marked the end of nearly two decades with the Mortenson Denver office located on 18th Street. In November, Mortenson opened its new 65,000 square foot regional office at 3083 Walnut Street. Mortenson’s self-performed services on the project included concrete, rough carpentry and drywall, and Mortenson also leveraging its controlled off-site manufacturing environment to produce and install prefabricated wall panels.

The Mortenson Construction Cost Index shows essentially flat costs for the 3rd Quarter 2024, continuing a period of negligible or slower cost increases experienced across the 12 months prior to Q2. With continued interest rate cuts and stable material costs, we expect overall spending on non-residential construction to increase as conditions across the next two quarters continue to improve. We recommend customers continue to gauge their market-specific challenge of labor procurement while considering project starts on an opportunistic basis across the remainder of 2024 and into the first quarter of 2025.