CHICAGO, Nov. 13, 2024 – The U.S. construction industry is primed for a year of steady growth and adaptability in 2025, following a robust 2024 marked by reduced project starts. According to JLL’s newly released 2025 U.S. Construction Outlook, the industry is entering a phase of moderate expansion, shaped by both opportunities and challenges amid shifting political and economic dynamics.

While the industry’s current project pipeline remains active, there is limited growth in new construction starts, which could lead to a slight dip in spending in the short term. However, JLL forecasts modest real growth by the end of 2025, supported by an overall positive outlook as the sector navigates through its challenges. Political and economic transitions may temper some growth opportunities, but JLL anticipates that the industry will lean into its core strengths to propel recovery in key sectors.

“The construction industry has bridged the gap in starts remarkably well to this point but needs the next round of groundbreakings to land smoothly and keep momentum up for the ongoing energy, tech, manufacturing and economic transformation we’re in,” said Andrew Volz, Research Manager, Project and Development Services, JLL. “We’re emerging from the period of ‘peak waiting’ for development with anticipated rate cuts, returning loan demand and elevated architecture and engineering inquiries signaling an uplift.”

Staying Ahead of the Curve in a Changing Market

As 2025 unfolds, the construction sector faces a rapidly evolving landscape. Economic conditions are in flux, and project requirements are becoming more complex. To seize the right opportunities and stay ahead of the curve, companies must be proactive in addressing potential project delays and market fluctuations.

“To capitalize on the cycles of growth and capacity in the construction industry, investors and occupiers need to anticipate market shifts and be prepared for potential project delays,” said Louis Molinini, Americas Market Lead, Project and Development Services, JLL. “We are closely monitoring economic indicators, staying informed on policy changes and developing flexible strategies to help our clients navigate uncertainty.”

Successfully navigating these shifts requires foresight and adaptability, balancing both immediate challenges and long-term objectives. Construction companies will need to remain agile as they respond to evolving environmental, economic, and demographic trends.

Sustainability and Innovation as Key Drivers

Sustainability and technology are at the forefront of construction industry growth, particularly in sectors like data centers, healthcare, and industrial projects. These sectors are increasingly incorporating green building practices and cutting-edge technology to meet growing demand and address environmental concerns.

“While we see investment across all industries – data center, healthcare and industrial projects are really embracing both sustainability and technology as part of their growth,” said Julie Hyson, Americas Portfolio Clients, Services and Industries Lead, Project and Development Services, JLL. “However, overlapping demand from hot sectors, competition from other projects and widespread shocks continue to distort supply selectively. Having the right team in place to manage these nuanced pressures is critical.”

The ongoing push for energy-efficient, low-carbon buildings, alongside the integration of technologies such as artificial intelligence (AI), the Internet of Things (IoT), and digital twins, is revolutionizing construction processes, offering new opportunities to enhance project efficiency and value. However, the sector still faces significant supply chain pressures, especially due to competitive demands and material shortages.

Cost Growth and the Path Ahead

In 2024, construction costs showed a near-flat year-over-year growth, but JLL projects that costs will rise by 5% to 7% in 2025. The increase will be influenced by supply and demand shocks, particularly in materials affected by natural disasters, booming sectors, and fluctuating economic policies.

“The U.S. construction industry is ready for growth, but the path forward is not without its challenges,” the report concludes. Strategic positioning in real estate, which considers environmental, social, demographic, and financial shifts, will be essential for navigating these complexities.

Construction companies will need to balance operational efficiency with long-term growth goals while staying attuned to technological advances and evolving organizational needs. Those that successfully manage this dynamic environment will be well-positioned to thrive in the coming years.