Value of private nonresidential construction in the US - Data and Analysis (1980-2032)

The value of private nonresidential construction is set to fall -3.5% in 2026 to reach $634.8 billion, in spite of a recent surge in data center construction activity. The sector has become sharply divided, with data center construction surging on the back of heavy AI investment by major technology companies while most other segments contract. Manufacturing construction is falling steeply as the wave of semiconductor and battery plants launched earlier in the decade reaches completion and few new megaprojects replace them. Tariffs on steel, aluminum and other building materials have lifted construction costs, while stricter immigration enforcement has tightened the supply of skilled labor. Reaccelerating inflation prompted the Federal Reserve to raise interest rates in September, keeping financing costs high for developers. Commercial, warehouse and traditional office projects remain particularly exposed to these pressures.The value of private nonresidential construction has risen over the past five years, though growth has been uneven. The period began with the sector recovering from pandemic disruptions, as businesses that had delayed capital projects amid uncertainty returned to the market. The e-commerce boom fueled strong demand for warehouses and distribution centers, while supply chain disruptions and surging materials prices pushed up project costs.Construction activity accelerated sharply in 2023, driven primarily by an unprecedented surge in manufacturing investment. The CHIPS and Science Act and the Inflation Reduction Act offered substantial incentives for domestic semiconductor, electric vehicle and clean energy production, prompting companies to break ground on large factories. Efforts to reshore supply chains following pandemic-era shortages further encouraged new industrial capacity. This strength offset weakness in office construction, which suffered from high vacancy rates as remote and hybrid work became entrenched.Growth stalled in 2024 and turned negative in 2025. The Federal Reserve's aggressive rate hikes raised borrowing costs and tightened lending standards, making it harder for developers to finance speculative commercial projects. Warehouse construction slowed as a glut of new space came online. Manufacturing activity peaked as major projects neared completion, while policy uncertainty surrounding clean energy tax credits and tariffs led firms to postpone new investment. Meanwhile, rapid adoption of generative AI has sparked a boom in data center construction, with technology companies committing record sums to new facilities. However, this boom has not been enough to offset declines elsewhere. Overall, the value of private nonresidential construction has grown at a compound annual rate of 2.2% over the five years through 2026.