Structural Steel and Precast Concrete Contractors NAICS 238120

Mar 7, 2026 - Nonresidential Construction Spending Drops

• The total value of nonresidential construction put in place declined 0.6% in December 2025 compared to the prior month, according to the US Census Bureau. Private spending was down 0.7% in December, while public spending was off by 0.4%. Speaking of December's spending results, Associated General Contractors of America (AGC) Chief Economist Anirban Basu said, "This decline was concentrated in the manufacturing segment, which is now down nearly 16% from the August 2024 all-time high. Given trade policy uncertainty and the waning effects of the CHIPS Act, manufacturing-related spending will likely continue to decline over the next several quarters. While manufacturing is the most significant driver of nonresidential weakness, it’s far from the only one. Eight of the 11 private nonresidential subsegments contracted in December, and total private nonresidential spending is now down 1.8% year over year."
• North American construction and engineering spending on nonresidential buildings in 2026 is expected to be flat after decreasing an estimated 2% in 2025, according to FMI’s first-quarter 2026 North American Engineering and Construction Outlook. A subset of the office sector, data centers will post spending growth of 23% in 2026 amid high demand for AI. In some markets, data centers account for 25% of all nonresidential building construction activity. The traditional office market continues to be pressured by a record-high vacancy rate of 21%, according to Moody's Analytics. Healthcare Construction spending is forecast to rise 3% in 2026 amid large hospital projects in several major metros, while educational project spending will be flat. Commercial spending is projected to decline by 4% in 2026 as construction activity centers on renovations rather than new buildings. Warehouse construction spending is expected to fall by 5% in 2026 amid an imbalance in supply and demand, especially in secondary markets away from major port, rail, and intermodal hubs. Lodging projects are forecast to decline by 2% in 2026 as remodeling and improvements drive spending.

• The rapid growth of artificial intelligence is fueling a data-center construction boom that significantly impacts the commercial real estate and housing industries, according to The Wall Street Journal. Tech giants are outbidding residential developers for vacant land, with some parcels selling for over $3 million per acre. This shift has transformed the commercial landscape, as developers find that server farms offer higher profit margins than traditional housing projects. In Northern Virginia, data centers accounted for up to 30% of land development in recent years, which has decreased the available inventory for new homes. Furthermore, the massive scale of these projects disrupts the broader construction sector by creating intense competition for essential labor and materials, including concrete, wiring, and electricians.
• Global hotel construction reached a record 15,922 projects, or about 2.4 million rooms, in the fourth quarter of 2025, rising 1% year over year as higher-tier segments fueled growth, according to Lodging Econometrics and reporting by Hotel Dive. In the fourth quarter, 6,140 projects were under construction, 3,845 were set to break ground within 12 months, and a record 5,937 were in early planning. The US led with 39% of global projects, followed by China at 23%. Luxury and upper upscale pipelines hit record highs, with luxury up 8% in terms of projects and 4% measured by rooms. US luxury projects also reached a record 95. Hyatt and Marriott plan to expand luxury offerings in 2026, citing strong Q4 performance. Conversions climbed 13% in Q4 2025 to a record 2,815 projects, reflecting growing importance for brands such as Hilton and IHG.