Dive Brief:
- Project abandonments surged 10.7% over the past month, according to Cincinnati-based ConstructConnect’s Project Stress Index, a measure of construction projects that have been paused, abandoned or have a delayed bid date.
- Delayed bid activity posted no change in June, while work put on hold decreased 6.6%. Overall, the Project Stress Index increased 1.5% last month.
- “Among abandoned projects, it is very possible that this number is being fueled by only a few severely impacted subcategories,” said Michael Guckes, chief economist at ConstructConnect. “Chief among suspects are private offices which continue to gravely struggle against current financial market conditions.”
Dive Insight:
The latest stress data continues to emphasize the differences in public and private construction projects, said Guckes.
On the private side, projects put on hold fell about 11.5% year over year.
However, despite the overall decrease, developers in Boston recently paused work on a life sciences project due to an oversupply of space and slow demand in the region, according to Banker & Tradesman. Boston-based developer Leggat McCall Properties began work in 2022, but halted activity due to market conditions.
LG Energy Solutions also last month temporarily paused a portion of its $5.5 billion battery manufacturing complex in Queen Creek, Arizona. The battery company pegged the decision to “market conditions,” the company’s global communications team said in a statement.
Public projects put on hold, which include infrastructure work, increased 5.2% compared to the same week a year ago, according to ConstructConnect.
Earlier this month, Amtrak’s redevelopment group hit pause on the $175 million Baltimore Penn Station redevelopment, according to The Baltimore Sun. Penn Station Partners, Amtrak’s redevelopment group, placed the project on hold amid cost-related delays that will likely change the final price tag, according to officials.
Abandoned projects
Meanwhile, public abandoned projects increased 3.6% year over year, while private project abandonments soared 48.7%, said Guckes.
“Public abandonments are near 2021 levels which is a relief in today’s volatile construction economy,” said Guckes. “Unfortunately, in the private realm, abandonments continue to be a significant problem for contractors who will find it hard to manage work flows and keep their crews busy while being subject to the risk of projects being abandoned.”