Spending in the office category has been hampered by remote work that has produced national vacancy rates approaching 20%. For manufacturing, warehousing and health care, timelines have increased “from 20% to 25% longer,” potentially adding two years or more to the development process. Despite increased planning activity, Gaus identifies “a fairly large caveat”—project delays are increasing significantly and getting longer. Planning https://newmexicodesign.net/environmental-marketing-in-the-trend-in-the.html activity has increased, says Dodge’s Eric Gaus, who compares the sudden activity to wallflowers at a dance suddenly entering the dance floor. Further rate cuts from the Federal Reserve and stronger business and consumer spending in 2027 will drive the 7% acceleration over the year. Despite overall weakness, mega projects and data centers are creating a construction boom in specific segments.
“The additional complexity of AI-related infrastructure makes highly skilled and experienced instructors all the more valuable; the older skew of the workforce makes the timing challenge all the more acute.” The industry’s demographics pose an additional challenge as nearly one-fifth of the construction workforce is over 55. A separate report from BlackRock last month cited Labor Department forecasts that show employment in skilled trades will grow by 5.3% on average from 2024 to 2034 versus the overall rate of 3.1%. And since August 2024, nonresidential specialty trade contractors have added 95,000 jobs.
✦ Quarterly forecasts across 22+ building types and nine U.S. regions Know where construction demand is heading by market, type, and territory Decades of verified construction starts by building type and geography to contextualize trends and validate strategy. Quarterly and annual forecasts by building type, material category, and territory, down to county level.
Growth is being driven by a narrow set of sectors
Renewed strategic focus and targeted technology investments https://power-at-work.com/how-excavators-have-transformed-the-construction-industry/ could be essential to maintaining a competitive edge in 2026 Access more insights for the aerospace & defense, chemicals & specialty materials, engineering & construction, mining & metals, oil & gas, power & utilities, and renewable energy sectors. The authors would like to thank Anuradha Joshi for her key contributions to this report, including research, analysis, and writing.
The economic repercussions of labor shortages in E&C are already evident and expected to intensify (figure 3). The E&C industry is at a pivotal moment, facing surging demand across sectors like data centers, grid-modernization megaprojects, and advanced manufacturing.17 This growth, fueled by several major federal legislative initiatives and programs, along with strong private investment, presents significant opportunities and formidable challenges. He has over 20 years of experience in developing data-driven insights and translating complex market trends into compelling thought leadership across multiple sectors and geographies. The Cost Index is determined by several factors considered on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace. The strongest recommendation is for teams to be disciplined during budgeting, design, and preconstruction, especially in how they track escalation forecasts, labor trends, material risks, and allowances. Commercial construction demand should remain strong through 2026, but companies should expect projects to be shaped by persistent escalation, labor shortages, tariffs, and supply chain disruptions.
- Energy cost increases driven by the ongoing conflict in Iran raise the cost of site operations, transportation, and the production of energy-intensive materials internationally.
- How can manufacturers harness agentic AI to help reshape their business and create value across their organizations?
- The focus has notably shifted from sustainable energy initiatives toward data centers and the infrastructure necessary to support them.
- As risks to federal funding and endowments increase for colleges and universities, and as demographics weaken for K–12 schools—due to a sustained drop in national birth rates, domestic migration and immigration trends—education construction will decelerate from 6% growth in 2024 to only 1% in 2025, according to Dodge’s report.
- Despite these advanced technologies, poor-quality data continues to frequently undermine the reliability of analytics and AI solutions,20 reducing the return on investment and limiting both operational and competitive advantage.
Additionally, Gaus observes increasing business travel as “more people are recognizing that getting together, whether in conferences or in-person meetings, the personal connections are really helpful to get through times of uncertainty.” This business travel growth might offset decreases in leisure tourism, he says. The hotel sector saw steep declines in spending in the early days of the pandemic, but an increase in travel has benefited the outlook for these facilities. The retail category is expected to see less than a 1% decline in spending this year before reversing to 2.0% growth next year, per the AIA Consensus Construction Forecast. AGC’s Ken Simonson notes that the non-residential sector shows the most dramatic contrasts, particularly in office construction where he reveals that “apparent flatness in office construction is really made up of a 30% spike in data centers, a 17% decline in private office.” While some new construction continues in major cities, Gaus indicates it’s not “the vast majority of what we’re seeing.” Spending by building owners to make the space more desirable has spurred reconstruction spending, but not enough to offset the decline in new construction.
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