Landscape Architectural Services NAICS 541320

Nov 7, 2025 - Nonresidential Construction Conditions Weaken

• Mounting pressures on the construction sector could reduce demand for landscape architectural services. During a webinar in October, Associated Builders and Contractors (ABC) chief economist Anirban Basu warned of tightening conditions for the U.S. construction industry, with rising interest rates, material costs, and financing challenges threatening project viability, according to Construction Dive. While data center construction remains strong, driven by investments in AI infrastructure, other sectors, such as commercial, manufacturing, and public infrastructure, are cooling due to tariffs, saturated markets, and dwindling government funding. Contractors outside the data center space report shrinking backlogs and reduced deal flow. The expiration of federal infrastructure funding in 2026 may further dampen demand.
• North American construction and engineering spending in 2026 is expected to rise 1% after decreasing an estimated 1% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Multifamily construction is expected to decrease by 2% in 2026, amid oversupply in some key markets and weak rent growth. Single-family construction is projected to rise 1% in 2026, as stubbornly high interest rates and elevated home prices reduce demand. Commercial construction spending is forecast to decline by 4% in 2026 as retail store closures surpass openings for the first time in a decade and warehouse vacancies remain high. Lodging construction is expected to decline by 2% in 2026, amid sluggish business travel growth and as financing conditions and maturing debt pose headwinds. Even as vacancy rates remain high, office construction spending growth will rise 7% in 2026, driven by data centers and converting offices to multifamily. Federal funding cuts are projected to result in flat educational construction spending in 2026, while healthcare projects are expected to see a 3% increase.

• Demand for building design services fell in September from the prior month, according to an October report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) dropped to 43.3 compared to August’s reading of 47.2. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries dropped to 50.1 in September from 50.3 in August, and the index for the value of new design contracts decreased from 47.2 to 46.3. September marked the 19th consecutive month of decline for new design contracts. The AIA’s Chief Economist, Kermit Baker said, "Unfortunately, business conditions remain relatively weak at architecture firms. There was some erosion in project backlogs this past quarter, with the greatest slippage coming from firms with an institutional specialization."
• Home remodeling spending is expected to remain stable for the rest of this year and through mid-2026, according to the Leading Indicator of Remodeling Activity (LIRA) report released in October by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 1.9% to $511 billion in the fourth quarter of 2025, compared to Q4 2024. In the first quarter of 2026, remodeling spending will reach $524 billion, up 2.4% from Q1 2025. Spending will then moderate to $519 billion in Q2 2026, up 2.1% from Q2 2025. In the third quarter of 2026, year-over-year spending is forecast to rise 1.9% to $517 billion. While solid remodeling permitting activity and gradually improving single-family home sales will support remodeling activity, potential headwinds include continued weakness of housing starts and economic uncertainty. Home remodeling spending is a demand driver for residential landscaping projects.