Project abandonments spike

Dive Brief:

Project abandonments jumped 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. The jump followed elevated levels in the index last month, as well.
Delayed bid activity remained unchanged while work put on hold decreased 14% over the past 30 days, marking the steepest 30-day decline since mid-2023, said Michael Guckes, senior economist at ConstructConnect. Overall, those positive aspects resulted in a 2% drop in the index itself, but the surge in abandonments stood out, particularly for publicly funded projects.
“Right now, what is clear from the year-to-date data is a steady, rising trend in public on holds and abandonments,” Guckes told Construction Dive. “As we move through 2024 we continue to see historically elevated levels of abandonments.”

Dive Insight:

Guckes added that abandonments have increased 60% from their 2021 base year level.

On the public side, which includes infrastructure work, projects put on hold increased about 3.6% compared to the same week a year ago, according to the report. Meanwhile, public abandoned projects surged 40.8% compared to the same period last year.

While weakness on the public side is a relatively new development, the private side’s long slide continued. Private projects put on hold increased 105% compared to the same week in 2023, said Guckes. For example, Jay Paul Co., a Bay Area real estate firm, recently delayed its massive tech campus project in San Jose, California, according to The Mercury News. The office, retail and restaurant complex hit a construction pause due to the region’s unstable office market.

Meanwhile, private project abandonments ticked down 10.7% compared to the same period a year ago.

“Not many months after interest rates started rising in early 2022 the private sector was quick to respond with greatly heightened levels of abandoned projects,” said Guckes. “This volatility coupled with overall elevated weekly readings has continued with little exception through present.”