Architectural Services NAICS 541310

Jul 20, 2025 - More Multifamily Development Outside Major Metros

• Apartment construction is increasingly shifting away from dense urban centers toward less populated and more affordable regions, according to the NAHB’s Q1 2025 Home Building Geography Index and reporting by Smart Cities Dive. Since 2016, large metro core counties have seen a 9.6 percentage-point drop in market share for apartment starts, hitting a low of 35.5%. The trend is fueled by affordability concerns, demographic shifts—especially the rise of older renters seeking suburban lifestyles—and project owners favoring lower-cost developments in exurbs and rural areas. Developers are pursuing projects farther out where land is cheaper and expansion is easier, though total activity in these areas remains relatively small.
• The Dodge Momentum Index (DMI) increased 6.8% in June 2025 to 225.1 (2000=100), up from the revised May reading of 210.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 7.3%, and institutional rose by 5.7%. Dodge’s associate director of forecasting, Sarah Martin, said, “Nonresidential planning steadily improved in June, alongside strength in warehouse, recreational, and data center planning. Planning momentum in other key sectors – like education, hotels, and retail stores – was more subdued. Expectations for weaker consumer spending and travel demand, as well as volatility around funding, are likely contributing to the weaker momentum of projects entering the planning queue for those sectors.”

• North American construction and engineering spending in 2025 is expected to grow by 1% after increasing an estimated 7% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. Nonresidential building construction spending is forecast to rise 1% in 2025, led by growth in data centers (up 32% over 2024 spending), amusement and recreation (+6%), educational (+4%), and transportation (+4%). Nonresidential building construction spending will be tempered by weakness in warehouse (down 5% compared to 2024 spending), commercial (-4%), lodging (-3%), and manufacturing (0%). Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 1% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 9% in 2025.
• Firms in the architecture, engineering, and construction (AEC) sector know that generative AI is going to transform their industry, but many struggle with how to adopt AI quickly enough to remain competitive, according to a recent survey by software and AI firm BST Global and reporting by Engineering News-Record. BST partnered with the American Council of Engineering Companies and other industry insiders to conduct the survey. The survey showed that while 82% of respondents expect AI to transform their industry, only 20% said their firm’s readiness was mature or advanced. Most of those surveyed said their AI strategies were in the pilot or exploration stage. More than 90% of respondents ranked “identifying use cases with business value” and “proving business value” as the top challenges for AI implementation. Minimizing risks and proper employee training were key objectives for effective AI adoption.