Commercial Construction Trends: What to Expect in 2025
If you’ve been keeping an eye on the commercial construction industry, 2024 was a year of growth—but several factors may impact that pace next year. Will the demand for new projects, renovations and expansions continue in light of interest rate changes and inflation? Let’s take a look at what’s expected and what it means for contractors, developers, and business owners planning projects in the coming year.
2024: A Year of Growth Despite Challenges
According to the U.S. Census Bureau, commercial construction spending increased by nearly 7% in 2024 compared to 2023. Businesses continued to invest in new builds and renovations despite the challenges of rising costs and labor shortages. High interest rates made financing more expensive, and price inflation impacted materials and labor costs, but the overall increase left many feeling optimistic. When the Federal Reserve made a 50-basis-point rate cut in September, there was even more reason to be hopeful. But according to Deloitte’s analysis, it may take time for this to significantly impact construction demand.
In addition, the lingering economic uncertainty may continue to slow down growth. Businesses may decide to take a conservative approach to new construction projects and opt for renovations or upgrades instead.
Workforce Development Is Key
The demand for skilled labor in the construction industry remains high, and companies that invest in training and retaining workers are typically better able to handle upcoming projects. Workforce shortages can lead to project delays and increased costs, making it essential for firms to prioritize quality staff. For businesses planning projects, this means partnering with contractors who have a strong, reliable workforce is more important than ever.
Supply Chain Disruptions Should Be Expected
Another challenge that will continue into 2025 is supply chain disruptions. Availability of materials and fluctuating prices are ongoing issues. While the situation has improved since the height of the pandemic, disruptions are still a reality. Contractors and developers are wise to plan for potential delays and consider sourcing alternatives or working with suppliers to lock in pricing where possible.
The Main Takeaway
If you’re planning a commercial construction project in 2025, here are a few key takeaways:
Timing Matters: While conditions are expected to improve gradually, projects initiated in 2025 may benefit from lower financing costs compared to recent years.
Partner with the Right Team: Look for contractors with strong workforce management and a track record of handling supply chain challenges effectively.
Consider Renovations or Upgrades: If new builds feel like a significant risk in uncertain times, renovating or optimizing existing spaces could offer a more budget-friendly alternative.
At EB3 Construction, we specialize in helping businesses navigate these complexities. Whether you’re considering a new build, a renovation, or simply planning for the future, we’re here to ensure your project is completed efficiently, on time, and on budget.
Let’s build something great together. Contact us today to discuss your next project.