Nonresidential construction planning took a step back in March, breaking the momentum built in the early months of 2025, according to new data from Dodge Construction Network. The slowdown underscores rising anxiety in the industry, particularly around the economic impact of newly imposed tariffs.

The Dodge Momentum Index (DMI), which tracks planning in the commercial and institutional sectors, dropped 6.9% in March. Analysts attribute the sharp decline to increasing uncertainty surrounding tariffs enacted by the Trump administration and their potential to drive up material costs across the board.

“Increased uncertainty around material prices and fiscal policies may have begun to factor into planning decisions throughout March,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “While planning data has weakened across most nonresidential sectors this month, activity remains considerably higher than year-ago levels and still suggests steady construction activity in mid-2026.”

The breakdown of the index highlights weakening momentum across key segments. Commercial planning dipped 7.8%, weighed down by reduced activity in warehouse developments, data center proposals, and retail projects. Meanwhile, institutional planning—which includes educational, healthcare, and life sciences facilities—fell 5%.

A major factor behind the March deceleration is industry wariness over the April 2 tariffs introduced by the Trump administration. The policy aims to bolster domestic production by placing levies on certain imported goods, but critics say it could inflate construction costs and delay timelines.

“Uncertainty around impacts from tariffs likely weighed on planning decisions,” said Martin. Her comments reflect widespread concerns among contractors and developers who now face potential project repricing and even cancellations if material costs spike in the coming months.

One of the biggest drivers of construction growth in recent quarters—data center planning—also showed signs of fatigue in March. For instance, Microsoft recently put a temporary hold on some of its major data center investments, including a $1 billion project in Ohio, according to the Associated Press. The tech giant cited market conditions and internal realignment as reasons for the pause.

While Dodge noted that data center planning remains at historically high levels, the March decline shows how vulnerable the sector could be to broader economic shifts. Rising costs from tariffs, combined with possible supply chain disruptions, could jeopardize future development.

Even with the monthly drop, the year-over-year numbers remain strong. The Dodge Momentum Index is up 30% compared to March 2024, with commercial planning rising 32% and institutional planning gaining 27%. However, that growth is heavily skewed by data center activity.

Without the contribution of data centers, commercial planning would have risen just 4% over last March, and the overall DMI would have climbed only 12%, according to Dodge. The disparity underscores how reliant the market has become on the tech-driven subsector.

Despite growing headwinds, a number of major projects still entered the planning phase last month. Dodge reported 25 new developments valued at $100 million or more. Significant commercial undertakings include:

• A $400 million Logistics Land Investments data center in Bessemer, Alabama.
• The $340 million expansion of the Ontario Convention Center and Hotel in Ontario, California.
• A $300 million “Project Cinco” data center in Natalia, Texas.

On the institutional side, notable new entries include:

• A $500 million ambulatory care building at the Scripps San Marcos Medical Center in San Marcos, California.
• The $165 million Roanoke High School project in Roanoke, Virginia.
• A $135 million expansion of the Milken Community School in Los Angeles.

Industry watchers will be closely monitoring whether the April tariffs will lead to a prolonged dip in planning activity or merely represent a temporary setback. The second quarter will likely set the tone for how developers recalibrate in a shifting policy environment.

Originally reported by Sebastian Obando in Construcion Dive.