ABC Ohio Valley’s safety education, toolbox talks, and certification programs help members reduce incidents, lower insurance premiums 20%, and strengthen their competitive position. Strengthen relationships with a few key general contractors and owners, emphasizing reliability, safety performance (EMR below 1.0), and 98% on-time delivery to become preferred partners on recurring work. From ABC Ohio Valley’s perspective, we invite regional contractors and suppliers to engage with our programs and community to navigate the next chapter of construction together. While 2026 presents real challenges, it also offers significant opportunities for disciplined, adaptable, and safety-focused construction businesses who lean into change.
It’s a standout performer, driven by the relentless demand for AI and it’s showing no signs of slowing for now.” These smaller facilities are being strategically located closer to consumer populations rather than concentrated in traditional data center hubs, representing a geographic diversification of the sector. Perhaps most notably, Gaus identifies a significant trend toward medium- and large-scale data centers—distinct from massive hyperscale data centers—that are “targeted towards the end user” for final computation needs. Virginia and Texas host the vast majority of large-scale data centers, primarily due to favorable regulations https://open-innovation-projects.org/blog/use-free-and-open-source-software-to-effortlessly-open-dwg-files and faster permitting processes. As Gaus explains, “We need a lot more power and water and creative solutions to building these sites near users without damaging the local communities that are there.” Some communities have pushed back against these facilities, says Gaus, though the overwhelming demand and financial incentives make complete obstruction unlikely.
By Q1 2025, some markets—especially in the South and Midwest—have actually become oversupplied, as evidenced by rising inventories. The construction industry responded effectively to the shortage, particularly in the South, building “tons and tons of houses,” says Gaus. https://myhomeimprovementmag.net/what-are-the-best-sustainable-building-materials/ The single-family housing market faced significant headwinds in 2025, with construction remaining underwhelming due to persistent affordability challenges. Residential construction, particularly multifamily, will be a major driver supporting growth over the coming year. Dodge’s Eric Gaus highlights a significant divergence between single-family and multifamily sectors.
Policy interactions will drive a net increase in construction costs
- Spending is still projected to increase 4.3% both this year and next, but there is a higher degree of uncertainty that will remain until final programmatic decisions are made.
- 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.
- Residential construction, particularly multifamily, will be a major driver supporting growth over the coming year.
- 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.
- Margin pressures from tariffs, volatile material costs, and ongoing supply chain disruptions are intensifying the potential need for firms to rethink traditional operating models.
ConstructConnect’s Michael Guckes reported that data centers have “doubled almost every year since 2021,” growing from $7 billion in 2022 to $32.9 billion through September 2025, with https://myshoppingconnection.com/which-eco-friendly-materials-are-best-for-home-construction/ potential for “yet another year of doubling growth.” After increasing by more than 50% last year, spending is expected to grow by another 33% this year and by an additional 20% next year. From a square footage perspective, total nonresidential construction will decline 2% in 2025 before re-expanding by 3% in 2026. By focusing on the data—not the noise—businesses can position themselves for resilience and growth.
From Uncertainty to Strategy: Brighter Construction Market Ahead
Immigration policies will likely remain a critical factor, as nearly 10% of construction and extraction workers are foreign-born, according to the US Bureau of Labor Statistics.29 Changes in visa regulations and immigration policies could further restrict labor availability in the industry. Additionally, the migration of engineering talent to technology firms—driven by demand for tech-enabled skills—is intensifying competition for skilled workers.25 The economic repercussions of labor shortages in E&C are already evident and expected to intensify (figure 3). As E&C firms plan for digital initiatives through 2026, technologies like cloud-native digital twins and AI agents are expected to become standard.
Backlogs and infrastructure investment point to continued opportunity across the U.S., including the Ohio Valley, even as some commercial and residential segments experience modest growth or decline. The regional construction market here demonstrates unique resilience and opportunities, with local demand patterns and project types sometimes diverging from national trends. Compared to other key sectors—such as commercial, manufacturing, and residential construction—data center construction is expected to continue outperforming in both growth and investment. The construction pipeline remains a key indicator of future opportunities in the region, signaling continued project flow and business growth potential. Planning data shows multifamily will remain strong through the rest of 2025 and into 2026. Dodge predicts multifamily starts will expand 6% to 640,000 units in 2025 and another 5% to 670,000 units in 2026, before pulling back through the remainder of the forecast period due to weaker demographic trends and reduced housing demand.
- Lokar highlighted the use of rates-of-change analysis, which helps define and anticipate shifts in the business cycle, offering early signals for strategic pivots.
- 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.
- Institutional facilities are expected to be the strongest sector with projected gains of 6.1% this year and another 3.8% in 2026.
- AGC’s Ken Simonson predicts that residential construction faces continued headwinds, with single-family down 2%, multifamily down 9% and improvements down 8%.
- While 2026 presents real challenges, it also offers significant opportunities for disciplined, adaptable, and safety-focused construction businesses who lean into change.
- Cost impacts from policy will increasingly materialize while opportunities reshuffle geographically and sector.
Mixed Outlook by Sector: Where the Work Is Growing (and Where It Isn’t)
- Much of that growth will be from continued strength in data center construction and groundbreakings on high-value megaprojects in select sectors.
- In growth segments—especially data center construction, advanced manufacturing, and energy infrastructure—competition for electricians, low-voltage technicians, and mechanical trades is especially intense.
- The single-family housing market faced significant headwinds in 2025, with construction remaining underwhelming due to persistent affordability challenges.
- The forecast is for a 3% growth in spending this year and an additional increase of 6% in 2026.
- Construction firms continue to compete aggressively for workers through wage increases.
They are increasingly leveraging digital tools, modular construction, and strategic partnerships to manage complexity and scale. With tariffs likely to remain elevated through 2026, firms are prioritizing strategies like increasing US sourcing, investing in cloud-based supply chain visibility, and using formal indexed pricing tied to published cost benchmarks. Advanced manufacturing, health care, and defense activities hinted at selective growth opportunities.3 Investment in structures is projected to pivot from a 2025 decline to modest growth (nearly +1.8%) in 2026, with AI-related data center outlays continuing to support engineering and construction (E&C) work.4
