Monday, May 07, 2018

Leading Index for Commercial Real Estate Increases in April

by Bill McBride on 5/07/2018 03:52:00 PM

Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.

From Dodge Data Analytics: Dodge Momentum Index Moves Higher in April

The Dodge Momentum Index jumped 6.1% in April to 163.0 (2000=100) from the revised March reading of 153.7. 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. Both components of the Momentum Index moved higher in April, with the commercial component up 6.3% and the institutional component up 5.8%. Over the last two months the commercial portion of the Momentum Index has posted the most aggressive growth, fueled by continued low vacancy rates for commercial buildings as well as the potential benefits from the tax cuts passed in December. The gains for the institutional component, while healthy, have been more moderate reflecting the ebb and flow of public funding for larger education and public building projects.
emphasis added
Dodge Momentum Index Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 163.0 in April, up from 143.7 in March.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further growth in 2018 and into 2019.