TL:DRPrivate developers scrapped more projects in May than in any other month on record, according to the latest data from Cincinnati-based ConstructConnect.The Project Stress Index, a measure of construction projects that have been paused, abandoned or have a delayed bid date, increased 11.4% in May. That figure puts project stress 22.8% above 2021 baseline levels, said Devin Bell, associate economist at ConstructConnect.“Abandonment activity has continued to rise, reaching its highest reading in over a year,” said Bell. “While public sector abandonment activity remains within historic levels, private sector abandonments have reached multi-year highs.”Bell pointed to high interest rates and shifting market conditions as key factors reducing project viability. He said those pressures continue to erode developerA 30.3% spike in overall project abandonments caused the surge in stress in May, according to the report. In contrast, delayed bids dropped 1.9% and on-hold activity remained essentially flat.Since the end of 2024, abandonment activity has climbed 66.5%, while bid delays have increased 4.3% and on-hold activity has dropped 18.5%, according to the report.For example, clean energy manufacturers canceled, closed or downsized about $8 billion in projects in the first quarter of 2025. That includes the cancellations of a $1.2 billion plant in Arizona and a $2.6 billion battery factory in Georgia.For the month, private sector struggles stood out sharply, said Bell.
Private abandonments increased 62.6% over the month, and are now up 92.2% year over year.That surge has led to the highest level of abandonments since ConstructConnect began tracking data in mid-2019.Meanwhile, private projects placed on hold increased 23.1% over the past 12 months, according to the report.
Public projects moved in the opposite direction over the last year. Abandonments on public works remained flat, while public projects put on hold fell 15.2%, according to the report.
My Thoughts 💭
These rates are crushing General contractors. The sad thing about this high interest rate environment is how it crushes small and medium sized construction businesses who might need access to cheap credit to make payroll, pay suppliers, and other operational expenses to keep the business afloat. Large companies like Turner and Clark can weather the storm.