- Data Centers
- Sustainability
- Workforce
- Technology
In 2025, will construction be up? Will it be down? What will be some of the top trends that take hold? Which markets will soar? And how does technology fit into all of this? These are just a few of the most pressing questions on the minds of today’s construction executives. Fortunately, we can get a handle on some answers in FMI’s 2025 North American Engineering and Construction Overview: First Quarter.
One big takeaway is while there is an assumed recession for the broader U.S. economy in 2025, FMI predicts construction and engineering spending will continue to expand. However, with that being said, the residential sector will continue to be challenged. However, the industry may experience some relief in the future with lower borrowing rates.
On the commercial side of the market, we see many sectors are forecasted to be more positive in 2025 due to ongoing work following the IIJA (Infrastructure Investment and Jobs Act), IRA (Inflation Reduction Act), and CHIPS and Science Act. Even though many sectors will be positive, they will slow in 2025, returning to stable growth rates of 2-3%, due to near-term inflation expectations. Infrastructure is anticipated to be one of the biggest areas of growth. And with all due respect, it’s about time.
Another big area of growth is one key specialty subsegment: data centers, which the U.S. Census Bureau recently began publishing as a subset of office construction. We see through the third quarter of 2024, private data center construction spending saw a roughly 60% increase from 2023 levels. Meanwhile, non-data center private office construction declines by nearly 15%. This is, in fact, one of the big four trends to watch in the report.
FMI suggests spending on data centers is forecast to reach more than $30 billion by 2026, with an annual growth rate of more than 10% through 2026. Data center construction is complex, too, to say the least. Builders must consider electricity demand, market constraints, and how to meet regulatory requirements and client expectations—but it will certainly be a big trend to watch in 2025.
Building on this, a second big area to watch is efficiency and sustainability needs across the entire market. Demand is greater than ever before, and we are seeing a shift of people to more urban areas, according to this report. In 1950, roughly 64% of people lived either in cities or surrounding suburbs. This trend is expected to grow, with 89% living there by 2050. Part of this could be due to urban sprawl. But this necessitates a greater focus on aging infrastructure and electricity demand, which we must consider as we move forward.
There are many ways the AEC (architecture, engineering, and construction) industry can achieve its sustainability goals—from the materials used, to construction technologies to heighten efficiency, to building automation to reduce energy consumption. There are many paths to success, as long as we recognize the end goal.
A third area we must focus on is the workforce—something I have been writing about for decades. FMI’s most recent survey found 38% expect to somewhat increase hiring and 41% plan to keep it about the same as 2024. But hiring is just the first step. We also must train, upskill, and reskill workers as needed. This will be an ongoing effort on the part of construction companies.
In our 2024 report, we came to similar conclusions, recognizing we are now engaging with workers in new and different ways. The key here will be shaping the skills and creating a path for that future and understanding what jobs we no longer will require. With 439,000 net new workers needed in 2025 and 499,000 needed in 2026, according to ABC (Associated Builders and Contractors), there is a lot of pressure to get this right. Sadly, the industry still failed to get this right. And the numbers really tell the tale.
Finally, we see technology taking center stage including BIM (building information modeling), robotics, collaboration, cloud, edge, and AI (artificial intelligence), just to name a few. Again, this is something we cover here at Connected World and Constructech quite a bit.
At the end of last year, I penned a blog about how 2025 will unfold for the construction industry, looking at the economy, labor, sustainability, and more. The bottomline is technology will need to drive transformation, and we must align people, process, and technology to ensure a better tomorrow. Where are you in the race to help your people, process, and technology?
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