What to Expect in 2026

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In Quick:

Reconstruction initiatives and adaptive reuse are gaining momentum in a unstable market.
Knowledge facilities and megaprojects are driving development, regardless of challenges in different sectors.
Companies should prioritize value management and strategic bidding to navigate 2026 efficiently.

As we strategy a brand new 12 months, the development economic system faces a well-known future: Uncertainty. Nevertheless, there are at all times vivid spots to the unknown, in addition to loads of alternative. Specialists from ConstructConnect, the American Institute of Architects (AIA), and the Associated General Contractors of America (AGC) just lately got here collectively for the newest Building Financial system Outlook, introduced by ConstructConnect News, to present their insights on how issues are going within the development trade.

How is the development economic system doing general proper now?

Whereas the general economic system stays unsure, there’s some development anticipated within the close to time period. Right here’s a breakdown:

GDP Development: The U.S. economic system is projected to develop modestly in 2026, with long-term rates of interest remaining unstable because of inflation issues.
Building Exercise: Reconstruction initiatives have gotten a bigger share of the market, pushed by growing older constructing inventory and financial volatility.

How has the economic system affected residential development?

Mortgage charges eased barely within the again half of 2025, however they’re nonetheless a barrier for a lot of hoping to purchase a home. Kermit Baker, Chief Economist with the AIA, introduced up a recent U.S. News survey that reported roughly 50% of potential consumers would re-enter the market if charges hit 6%.

Housing shortages persist, however modern options are rising:

In October 2025, the U.S. Senate handed the ROAD to Housing Act, a invoice that directs HUD to develop greatest practices to offer municipal governments with choices to extend housing on the native degree.
Accent Dwelling Items, or ADUs, now account for practically half of recent single-family models in California That determine was solely 5% simply seven years in the past, in line with Baker.
Office-to-residential conversions have added 10,000 housing models in New York’s Manhattan since 1992, with extra within the pipeline.

“This tempo of development goes to proceed,” Baker mentioned. “Actually, constructing conversions have been a very fashionable technique for creating housing alternatives in addition to for using underutilized buildings.”

How are labor and materials prices impacting the development economic system?

It is no secret that labor shortages and rising materials prices proceed to problem the trade.

In regard to labor and the workforce:

Construction wages are rising faster than the broader economic system, with will increase exceeding 4% yearly. AGC Chief Economist Ken Simonson says it’s because corporations are paying more cash to get extra employees.
Job openings have dropped, however layoffs and quits stay low, signaling cautious optimism amongst corporations.

In keeping with Simonson, “Staff do not see a possibility by leaping to a different development agency or by leaving development for different industries. And all of that is according to a survey that AGC accomplished this summer time about firms’ workforce expertise and expectations.”

In relation to development supplies:

Tariffs are driving up costs for key development inputs:

“Tariffs may help some manufacturers, and definitely we have seen dramatic bulletins by some CEOs and even heads of state about investments that they will be making. However these usually lack specificity as to time, place, or goal,” Simonson mirrored. “In the meantime, different producers are holding off as a result of they need to see what their aggressive place might be as soon as they should pay tariffs on their very own inputs—not simply on the manufacturing development prices—and whether or not they will face retaliation or discrimination from overseas rivals.”

What sorts of development initiatives succeeded in 2025?

Not all areas of the development trade struggled this 12 months. Knowledge facilities and megaprojects, or those who value not less than $1 billion, are paved the way in 2025.

“Knowledge facilities stay resilient, whilst different personal sectors face challenges,” Christy O’Brien, Director of Content material Acquisition at ConstructConnect, famous.

Present statistics on information facilities within the U.S.:

U.S. information heart begins are up 15.1% year-over-year, pushed by AI and cloud computing demand. A “begin” is simply because it sounds, a development venture that has began or damaged floor.
2025 has been essentially the most energetic 12 months for information heart initiatives, with over $400 billion in future initiatives already printed.

In his November 2025 Data Center Report for ConstructConnect Information, ConstructConnect Chief Economist Michael Guckes reported on 39 late-stage preconstruction initiatives being tracked by ConstructConnect. All had deliberate begin dates earlier than the tip of the 12 months, with a mixed price of $25.5 billion.

“Ought to all these initiatives break floor as anticipated, it will raise complete information heart begins for the 12 months to over $58 billion, a determine that’s greater than double the 2024 report excessive. Moreover, it will additionally deliver the 3-year compounded annual development charge (CAGR) of knowledge heart begins spending to 98.7%,” Guckes wrote.

O’Brien is optimistic we’ll see these sorts of outcomes.

“I believe ‘information heart’ is just like the buzzword of the day, and I believe it should stay a standout performer pushed by the relentless demand for AI. It is actually displaying no indicators of slowing for now,” she mentioned.

Present statistics on megaprojects within the U.S.:

Via September 2025, megaprojects totaled $134 billion, a 47% improve over 2024.
These massive initiatives are driving development in nonresidential development, whilst different sectors gradual.

Talking through the Building Financial system Outlook, Guckes mentioned, “Final 12 months was a report excessive, and this 12 months is blowing away final 12 months’s report highs. So the impact of megaprojects on development merely can’t be underestimated or underappreciated.”

What’s subsequent for the development economic system in 2026?

The development trade is in a little bit of a difficult spot proper now. Whereas development stays gradual in some main sectors, specialists say there might be some modern alternatives for builders in 2026.

Listed below are some key takeaways to bear in mind:

Reconstruction initiatives, together with office-to-residential conversions, are rising in significance.
Knowledge facilities and megaprojects will proceed to dominate, however questions stay about their long-term sustainability.
Companies should concentrate on value management and strategic bidding to guard revenue margins in a difficult atmosphere.

When requested about her outlook for subsequent 12 months, O’Brien mentioned, “Wanting forward, I believe the important thing query I am curious about for subsequent 12 months is whether or not we’ll see a stabilization in borrowing prices and higher readability on the [U.S. international] commerce coverage. I believe these two elements will seemingly decide whether or not we see a rebound in personal sector exercise or if this cautious strategy continues.”

Talking on reconstruction changing into a development, Baker mentioned, “The development market is actually unusually unbalanced at current. We’re seeing a couple of sturdy sectors, however a lot of the core sectors we take into consideration are actually pretty weak. I believe there are extra alternatives within the reconstruction realm, significantly adaptive reuse and conversion of unutilized services. I believe the demand is there.”

Guckes is targeted on prices.

“It’s displaying up within the information in all places that corporations have been sacrificing their revenue margins to assist hold costs steady, however that’s solely a short lived repair,” he mentioned. “So, for 2026, be ruthless in value management and just remember to’re bidding accurately.

“I believe that’s going to be the largest problem for subsequent 12 months for lots of corporations.”

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