1. Data Centers and Infrastructure Drive Growth
The numbers don’t lie: commercial construction is being fueled by targeted, high-impact sectors. In November 2024, the total value of construction reached $2,152.6 billion, with public safety (+19.4% YoY), water supply (+13.8% YoY), and manufacturing (+11.3% YoY) leading the charge. But the real story is in planning—U.S. commercial construction planning in January 2025 was up 26% from the previous year, driven largely by data center projects.
- Why It Matters: The explosion of AI, cloud computing, and digital infrastructure is pushing demand for data centers, advanced manufacturing facilities, and supporting utilities. These projects require precision, speed, and expertise in energy-efficient design.
- What to Watch: Federal infrastructure spending (e.g., the Infrastructure Investment and Jobs Act) continues to bolster public-sector projects, creating a ripple effect of opportunity through 2025 and beyond.
2. Cost Volatility: Materials and Energy in Flux
Construction costs are a moving target. While overall input prices rose 0.9% YoY through December 2024, nonresidential materials saw a modest 0.6% increase. Yet, energy costs are spiking—natural gas prices soared 57.7% MoM in December 2024, signaling potential turbulence for energy-intensive materials like steel and concrete.
- Why It Matters: Volatility is back, and it’s testing project budgets. Contractors and clients need to lock in pricing early and explore alternatives like prefabrication to mitigate risks.
- Recommendations: Be proactive about supply chain management and local supplier relationships help stabilize costs and keep your project on track, even when markets shift.
3. Labor Slowdown Meets Tech Innovation
The labor market is cooling. Nonresidential construction added just 4,700 jobs in December 2024, with unemployment rising to 5.2%—a sign of cautious hiring amid economic uncertainty. At the same time, labor costs climbed 3.02% YoY in Q3 2024, putting pressure on margins.
- The Tech Response: Automation, modular construction, and AI-driven project management are filling the gap. From robotic equipment on-site to software optimizing schedules, technology is no longer optional—it’s essential.
- Why It Matters: Skilled labor shortages aren’t going away, but smart tech adoption can boost efficiency and reduce reliance on headcount. Avara integrates these tools seamlessly, delivering faster timelines without sacrificing quality.
4. Sustainability as a Competitive Edge
Green building isn’t a trend—it’s a mandate. Developers, tenants, regulators, and investors are demanding energy-efficient designs, low-carbon materials, and net-zero-ready facilities. Data centers, in particular, are under scrutiny to balance massive energy needs with sustainability goals.
- Market Shift: The North American construction market is projected to grow from $2.58 trillion in 2025 to $3.26 trillion by 2030 (4.82% CAGR), with sustainability driving investment in healthcare, education, and industrial projects.
- Why It Matters: Projects that prioritize ESG (Environmental, Social, Governance) criteria win funding and public support. Expertise in sustainable construction ensures your build meets today’s standards and tomorrow’s expectations.
5. Speed and Agility Define Success
Lead times have stabilized - most materials are back to predictable schedules - but specialty items like advanced HVAC systems and electrical components still lag at 12-20 weeks. Meanwhile, tenants and developers want faster turnarounds to capitalize on market opportunities.
- The New Normal: Modular construction and off-site fabrication are slashing timelines, while real-time data from planning tools keeps projects agile.
- Why It Matters: In a competitive market, delays kill momentum. Our streamlined processes and innovative methods deliver speed without compromising durability or design.
What’s Next for 2025?
The commercial construction market is poised for cautious optimism. Growth is steady but uneven, with economic headwinds tempering private-sector enthusiasm. Yet, opportunities abound in niche sectors - data centers, infrastructure, and sustainable retrofits are set to dominate. The winners will be those who adapt quickly, leverage technology, and prioritize resilience.
At Avara , we’re ready. Our team combines deep industry insight with hands-on innovation to turn trends into results. Whether you’re breaking ground on a cutting-edge facility or reimagining an existing space, we’ve got the expertise to make it happen.
