Nonresidential construction planning showed slower growth in February, after several months of stronger performance, according to the latest report from Dodge Construction Network. The Dodge Momentum Index (DMI), a key indicator of nonresidential construction planning, increased by just 0.7% in February. While commercial planning, particularly in data centers, saw an uptick, institutional sectors, such as hospitals and schools, saw a significant slowdown.

Slower Growth in Institutional Sectors

Institutional planning took a step back in February, dropping by 4.6%, which contrasted with stronger performance in the previous months. On the other hand, commercial planning was buoyed by continued growth in the data center sector, which increased by 3.3% and helped offset losses in the institutional sector.

“Planning momentum moderated in February after a few months of stronger growth,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “Increased uncertainty around material prices and fiscal policies may begin to weigh on planning decisions, but for the time being, planning activity is largely continuing to move forward.”

Data Centers Continue to Drive Growth

The data center sector played a crucial role in keeping the overall planning momentum afloat. Without the influence of data centers, the DMI would have dropped by 2% in February, highlighting how important these projects are to the overall market.

Despite a slowdown in institutional sectors, the DMI was still up 27% compared to February 2024. Commercial planning surged by 43% over that period, while institutional planning saw a modest 2% increase. Much of this yearly growth can be attributed to the booming data center industry.

“Data centers propped up overall activity,” Martin noted. "Without those projects, the DMI would have declined 2% in February.”

Impact of Data Center Boom on Yearly Growth

Excluding data centers, commercial planning would have seen a much smaller increase, up by just 12% year-over-year. Overall, the DMI would have increased by only 8% without the data center segment. This highlights how the sector continues to dominate the commercial planning landscape and drive growth in the broader construction market.

Large-Scale Projects Enter Planning

In February, a total of 26 projects valued at $100 million or more entered the planning stages, seven fewer than the previous month. Notable commercial projects included:

• The $500 million Tract data center in Chester, Virginia.
• The $350 million SAT93 and SAT94 Microsoft data center projects in San Antonio, Texas.

On the institutional side, significant projects included:

• The $329 million Burlington High School in Burlington, Massachusetts.
• The $300 million T-Mobile Arena renovation in Las Vegas.
• The $300 million North Dakota State Hospital in Jamestown, North Dakota.

Looking Ahead: Continued Momentum with Caution

While planning activity has moderated slightly, the overall outlook for the construction industry remains positive. The growth seen in commercial planning, particularly in the data center sector, points to a continued demand for large-scale infrastructure projects, even as institutional sectors experience more sluggish growth.

As the year progresses, experts will be keeping a close eye on the impacts of fiscal policies and material costs, which may influence future construction planning decisions. For now, the data center boom appears to be a key driver of the construction market’s resilience, helping to offset the challenges faced by other sectors.

Originally reported by Sebastian Obando in Construction Dive.