News
January 31, 2025

How Uncertainty Will Shape Construction Growth in 2025

Caroline Raffetto

In 2025, the construction industry faces a unique set of challenges and opportunities. The sector’s outlook is cautiously optimistic, influenced by a variety of economic, environmental, and policy shifts. While growth is expected, it will be uneven across different property types. Office spaces and core industrial projects may see slowdowns, but data centers, healthcare, and advanced manufacturing will continue to drive forward momentum.

According to JLL’s Louis Molinini, “Despite changing economic, environmental and technological conditions, the outlook for the construction sector in 2025 remains positive.” Key factors influencing the sector include new economic and trade policies, a push for sustainability, and efforts to manage rising material costs.

construction gains in 2025 ...

The first three quarters of 2024 indicated strong construction performance, with a 7% increase in construction spend over 2023. However, construction starts were lower in recent months, and the architecture industry has experienced contraction. The outlook for 2025 suggests more modest gains, with an anticipated 5-7% increase in construction costs, driven by material demand shifts and natural disasters.

Molinini emphasizes the long-term importance of sustainability, stating, “Sustainability is no longer a 'nice to have'—it is a must for talent retention and fulfilling corporate decarbonization goals.” Advances in building technology, such as AI and digital twins, will shape the design and construction landscape. As many corporations and local governments continue prioritizing decarbonization, sustainability remains a core focus.

Resilience and adaptation are key themes for 2025, particularly in combatting obsolescence in legacy office spaces. "Obsolescence presents an opportunity for retrofit projects and adaptive reuse," Molinini notes, pointing to potential redevelopment options for under-utilized office properties, especially for conversion into housing.

To succeed in the complex 2025 environment, construction companies must be prepared for shifts in policies, labor dynamics, and market conditions. The industry's ability to adapt, innovate, and plan strategically will be crucial for navigating potential project delays and cost increases, particularly in the face of climate events and potential trade policy changes.

News
January 31, 2025

How Uncertainty Will Shape Construction Growth in 2025

Caroline Raffetto
Construction Industry
United States

In 2025, the construction industry faces a unique set of challenges and opportunities. The sector’s outlook is cautiously optimistic, influenced by a variety of economic, environmental, and policy shifts. While growth is expected, it will be uneven across different property types. Office spaces and core industrial projects may see slowdowns, but data centers, healthcare, and advanced manufacturing will continue to drive forward momentum.

According to JLL’s Louis Molinini, “Despite changing economic, environmental and technological conditions, the outlook for the construction sector in 2025 remains positive.” Key factors influencing the sector include new economic and trade policies, a push for sustainability, and efforts to manage rising material costs.

construction gains in 2025 ...

The first three quarters of 2024 indicated strong construction performance, with a 7% increase in construction spend over 2023. However, construction starts were lower in recent months, and the architecture industry has experienced contraction. The outlook for 2025 suggests more modest gains, with an anticipated 5-7% increase in construction costs, driven by material demand shifts and natural disasters.

Molinini emphasizes the long-term importance of sustainability, stating, “Sustainability is no longer a 'nice to have'—it is a must for talent retention and fulfilling corporate decarbonization goals.” Advances in building technology, such as AI and digital twins, will shape the design and construction landscape. As many corporations and local governments continue prioritizing decarbonization, sustainability remains a core focus.

Resilience and adaptation are key themes for 2025, particularly in combatting obsolescence in legacy office spaces. "Obsolescence presents an opportunity for retrofit projects and adaptive reuse," Molinini notes, pointing to potential redevelopment options for under-utilized office properties, especially for conversion into housing.

To succeed in the complex 2025 environment, construction companies must be prepared for shifts in policies, labor dynamics, and market conditions. The industry's ability to adapt, innovate, and plan strategically will be crucial for navigating potential project delays and cost increases, particularly in the face of climate events and potential trade policy changes.