Design and Construction Report staff writer
After a cooling period in 2025, total construction put in place in the United States is forecast to rise by 1% in 2026 to $2.2 trillion, according to the latest 2026 North American Engineering and Construction Industry Overview released by FMI.
The report paints a picture of an industry in transition, defined by “divergence” where headline stability masks deep unevenness between sectors. While data centers, power, and infrastructure projects are surging, traditional private segments such as multifamily residential, commercial retail, and office construction face continued headwinds from tight credit and high vacancies.
“The industry is entering a transition year marked by heightened uncertainty, uneven performance across sectors and regions, and the convergence of powerful macro forces,” said Chris Daum, president and chief executive officer of FMI. “Resilience is now mandatory.”
FMI identifies several critical trends shaping the built environment, noting that infrastructure and “megaprojects” are largely offsetting weakness in cyclical building sectors.
- Data Centers Dominating Office: While traditional office construction struggles with record vacancy rates—projected to near 21% by late 2025—spending in the office category is forecast to grow 7% in 2026 solely due to data centers. In some metros, data centers now account for more than 25% of total nonresidential building construction.
- Power and Infrastructure: Nonbuilding structures are expected to lead growth, rising 4% in 2026. This is driven by urgent needs for grid modernization to support high-load data centers and manufacturing.
- Residential Stabilization: After declines, single-family residential spending is projected to improve modestly by 1% in 2026 as the market adjusts to interest rates settling around 6% to 6.5%. However, multifamily construction is forecast to fall 2% as a wave of new inventory is absorbed.
The report highlights an elevated risk of recession extending into 2026, driven by a cooling labor market and persistent challenges in private development financing. However, FMI notes that “construction overall remains stable” due to extreme growth in mission-critical segments like power, water, and transportation.
“Executives who delve deeper into the headlines to truly understand their sectors and geographies will be able to best position their companies,” Daum said.
