Friday, June 26, 2026

Executive snapshot

• Deteriorating Architecture billings just dropped hard. The May ABI at 44.5 (from 48.3) is one of the steepest single-month declines in years, pointing to materially weaker traditional nonresidential activity 9–12 months out across healthcare, education, office and commercial. AIA
• Cautious Mechanical/HVAC is a critical-path scope on cooling-intensive jobs. Data-center and healthcare cooling — chillers, CRAH/CDU units, sheet-metal — face copper/aluminum cost pressure and multi-month equipment lead times that now rival electrical gear in scheduling risk. DatacenterDynamics
• Positive DFW is the bellwether industrial market. Marcus & Millichap ranks Dallas-Fort Worth #3 nationally on 22M+ SF of deliveries, with rising demand chipping at supply and data-center vacancy at a razor-thin 1.8%. Bisnow
• Neutral Grid interconnection is the new gatekeeper in Texas. ERCOT's 225 new interconnection requests — ~70% large-load data centers — and the Batch Zero decision mean power availability, not land, increasingly determines which DFW projects pencil. Texas Tribune
• Positive Materials cost inflation stays cool. May PPI shows steel mill products -0.78% m/m, construction materials essentially flat (-0.03%), cement +0.10%, inputs to construction +0.25% — a calmer backdrop than 2022-23. BLS PPI
• Positive Diesel back below $5. On-highway diesel fell to $4.832/gal (-$0.227 WoW) even amid Strait of Hormuz tension, easing hauling and equipment operating costs across active jobs. Work Truck Online
• Cautious Copper and aluminum firmed this week. Copper +2.01% to ~$6.06/lb and aluminum +1.52% to ~$3,166/T — a reminder that metals-intensive mechanical and electrical scopes still carry escalation risk into bids. Trading Economics

Market movers

Sector outlooks

Strategic watchlist

• Treat the ABI's 44.5 as a planning signal. The sharp May drop, lagging 9–12 months, points to soft traditional nonresidential demand into mid-2027 — redeploy capacity toward data-center and industrial work. AIA
• Lock long-lead mechanical AND electrical early. With chillers/CDUs joining transformers (~128 wks) and switchgear (44–54 wks) on the critical path, issue equipment-only bid packages at 60-75% design — not after 100% CDs. iRecruit
• Watch ERCOT interconnection in Texas deals. With ~70% of large-load requests from data centers and Batch Zero advancing, confirm grid availability before underwriting DFW data-center or industrial sites. Texas Tribune
• Escalate copper and aluminum into bids. Both firmed this week; HVAC coils, piping and ductwork carry real exposure — tighten escalation clauses and shorten bid-validity windows on mechanical scopes. Trading Economics

Top questions leaders should be asking

• With the ABI down to 44.5, where do we redeploy capacity away from traditional nonresidential toward data-center and industrial work over the next 9-12 months?
• Have we moved chillers, CRAH/CDU units and other long-lead mechanical onto the same early-procurement track as transformers and switchgear?
• For our Texas pipeline, have we confirmed ERCOT interconnection availability before committing to data-center or large-industrial sites?
• Which active bids carry meaningful copper/aluminum exposure, and are escalation clauses and bid-validity windows tightened on mechanical scopes?
• In a #3-ranked but supply-heavy market like DFW, are we targeting preleased and small-bay product rather than chasing slow-leasing big boxes?