Sweden-based global construction and development firm Skanska has reported a record-high backlog for its construction division, driven by robust demand across key sectors, particularly infrastructure, data centers, and public sector projects. With a strong focus on the U.S. market, the company’s diverse portfolio continues to show resilience, according to Skanska’s CEO Anders Danielsson.

"We are well positioned when it comes to [data centers], especially in the U.S., where we see the strongest activity," Danielsson stated during the company’s earnings call on Friday. "There are multiple clients, repeat clients, that want to build out."

As demand for data centers grows, Skanska sees this sector as a significant driver for expansion, alongside more traditional infrastructure segments such as roads, railways, and airports. Public sector funding has also provided continued stability for the company’s involvement in projects like schools and hospitals.

"We are strong in other segments as well. We’re in more traditional infrastructure, for example, roads, railways, and so on," said Danielsson. "We are also strong when it comes to schools, hospitals, university, airports. So, we are in the right places."

Skanska’s total order backlog hit an impressive 285 billion crowns (approximately $26 billion), marking a 24.1% increase from the previous year’s 229.6 billion crowns. This backlog represents about 20 months' worth of production, indicating the firm’s solid position in the marketplace.

Revenue for the fourth quarter of 2024 climbed to 50.6 billion crowns, reflecting a 20% year-over-year increase when adjusted for currency fluctuations. For the full year, Skanska's revenue rose by 13%, reaching 177.2 billion crowns.

"We have larger projects in the U.S.," said Danielsson. "The market continues to be strong, definitely."

During the call, an analyst inquired about any disruptions in federal project payments or potential impacts from a new government administration on Skanska’s U.S. public sector work. Danielsson responded by reassuring investors that Skanska has not faced any issues with its U.S. public sector contracts.

"We have a very stable operation. We have good contracts with repeat clients in the U.S. on the public side," Danielsson affirmed. "We don’t see any trend downwards when it comes to the pipeline, either. It continues to be strong and stable."

High Interest Rates and Commercial Property Development

Despite the positive outlook in many areas, Danielsson acknowledged the challenges facing U.S. commercial property development due to high interest rates, which have caused the sector to lag compared to other parts of the world.

"For commercial property development, we see the transaction market coming back somewhat in Europe. Could see our divestment there lagging a bit in the U.S. due to the interest rate situation there," Danielsson explained. "But the leasing market is stable in Europe and also improving in the U.S., so that’s encouraging."

Commercial property demand remains mixed, though some recovery is visible as companies bring employees back to the office. This shift has sparked a gradual improvement in leasing markets, particularly in Europe and the U.S.

"It is a polarized market," said Danielsson. "Flight to quality is really clear, and that’s exactly the type of product we can offer the market. That’s beneficial for us."

Diversifying Skanska’s Portfolio

Looking ahead, Skanska plans to diversify its portfolio beyond traditional office buildings. The company is making moves to expand into life sciences and multifamily rental property construction in the U.S.

"In the commercial development operation, we continue to believe in the office market long term," Danielsson shared. "But we also have said that we will try to diversify the portfolio. We are looking into life science, for example, in parts of the U.S. We also have started residential for rental use, that’s also a good market."

These strategic moves come as Skanska seeks to balance its long-term commitment to office development while adapting to shifting market demands, positioning itself as a key player in emerging sectors.

Skanska’s Future Outlook

With strong U.S. operations and a diverse portfolio in place, Skanska is poised for continued growth in the coming years. The firm’s ability to adapt to market shifts, particularly in infrastructure and commercial development, positions it well to take advantage of emerging opportunities, while its stable U.S. public sector work ensures long-term sustainability.

Skanska’s growth in data centers and infrastructure, paired with a diversified approach to commercial property and a focus on long-term trends, will likely keep the firm at the forefront of the global construction industry.

Originally reported by Sebastian Obando in Construction Dive.