Commercial Projects Gain Momentum, Business Costs and Aging Drive Migration, Air Cargo Demand Declin
Commercial Projects Gain Momentum
Nonresidential projects are helping to make up for slowing construction as the housing market cools, with a significant rise in projects in October such as data centers, hotels and office-to-lab conversions entering the planning and development pipeline.
The monthly momentum index report released Monday by data firm Dodge Construction Network showed the volume of new nonresidential commercial projects rising 13% from September, with nonresidential projects from institutional operators, such as education and government entities, rising 2.9%. Both contributed to a momentum index reading of 199.7 for October, with the year 2000 serving as a base of 100 for the nonresidential-focused metric.
“The sustained upward trajectory in the momentum index shows optimism from owners and developers that projects will continue to move forward, even with rising concerns of an economic recession,” Dodge Construction Senior Economist Sarah Martin said in a statement. “Specific nonresidential segments, such as data centers and life science laboratories, have thrived in 2022 and continue to support strength in planning activity.
“As we move into next year, however, labor and supply shortages, high material costs and high interest rates will likely temper planning activity back to a more moderate pace,” she added.
Dodge Construction tracked 15 U.S. projects, each with a value of at least $100 million, entering the planning pipeline in October. Commercial projects included a $206 million expansion of the M Resort in Henderson, Nevada, with the largest institutional projects including the $500 million uCity Square lab and office complex in Philadelphia and a $294 million biotech lab complex in San Carlos, California.
Business Costs, Aging Drive Migration
Shifting priorities among younger residents looking to age in more affordable surroundings, along with companies and workers seeking lower costs, have been the leading drivers of heightened U.S. migration during the pandemic, according to a new report from foot traffic analytics firm Placer.ai.
The Los Altos, California-based firm analyzed migration data for more than 60 metropolitan regions between 2019 and 2022, based on the latest Emerging Trends in Real Estate report from Urban Land Institute and consulting firm PwC. Placer.ai found that regions with a higher share of young residents, age 25-44, “experienced more outbound migration, while cities with fewer young residents saw more net population growth as a result of migration.” Also, regions with higher proportions of renters were more likely to have seen more out-migration, while those with larger proportions of homeowners experienced heightened in-migration.
Researchers said this could signal that some people, as they age, are moving out of “younger” cities and relocating in areas “where they can more easily settle down, buy a house, and engage in more grown-up-oriented recreational activities.” This trend also reinforces an issue of affordability that existed well before the pandemic.
The report found regions with lower business costs have been the biggest people magnets during the pandemic, with Boise, Idaho, posting among the highest rates of inbound migration and low business costs, with New York City seeing more outbound migration with its higher business costs.
“Many cities and states that were already attracting new residents before the pandemic saw their inbound migration pick up pace, while some areas where the population was stagnant or declining before COVID saw these negative trends accelerate as well,” the report said.
Air Cargo Demand Declines
Contractions in major economies contributed to a slowdown in global demand for air cargo services in September, the International Air Transport Association reported Monday.
The Geneva-based trade group said global shipments measured in cargo ton-kilometers — the weight in tons of material transported multiplied by the number of kilometers traveled — fell 10.6% from year-earlier levels in September and were down 3.6% from the same month of 2019. Shipment capacity rose 2.4% from a year earlier but was still down 7.4% from September 2019 levels.
“While air cargo’s activity continues to track near to 2019 levels, volumes remain below 2021’s exceptional performance as the industry faces some headwinds,” Willie Walsh, the trade group’s director general, said in a statement. “At the consumer level, with travel restrictions lifting post-pandemic, people are likely to spend more on vacation travel and less on e-commerce.
“And at the macro level, increasing recession warnings are likely to have a negative impact on the global flows of goods and services, balanced slightly by a stabilization of oil prices,” Walsh said. “Against this backdrop, air cargo is bearing up well.”
The trade group reported the Middle East had the biggest annual drop in air cargo volume during September at 15.8%, followed closely by Europe, which was down 15.6%. North America fared relatively well with volume declining 6%, and Latin America saw volume rise by 10.8%.