2025 Construction Perspective

How is the construction industry faring in 2025 and how has the outlook changed? JLL's 2025 Construction Perspective U.S. Midyear Update examines how CRE stakeholders are moving their decision making beyond reactivity, how project-specific risks are being assessed, and how we’re preparing for local impacts of national policy.

The report analyzes construction spending, material costs and changes in the construction labor force. It provides essential insights for navigating a period of extensive uncertainty.

Moving decision making beyond reactivity

Policy volatility has disrupted development patterns, creating varied challenges and opportunities across regions and sectors. Projects are on hold, spending forecasts down, and contractors face reductions in secured work. Uneven industry responses affect schedules and costs while employment losses compound existing shortages. These factors may further reshape construction opportunities in affected markets.

Assessing risks to project-specific needs

Tariffs impact construction materials unevenly due to unique supply chains spanning intermediate goods and domestic production. Effects will vary by sector, material category, and market through 2025. Trade patterns reorganizing around current volatility rather than awaiting certainty may have durable impacts. A diminished U.S. role in global trade would create long-term challenges for construction, regardless of current policy longevity.

Preparing for local impacts

The industry faces unprecedented pressure from immigration policy, including targeted federal deportation efforts. Enforcement actions at jobsites have created a chilling effect, with contractors reporting increased absenteeism and project delay concerns. These disruptions affect both existing projects and future work capacity, compounding labor challenges that already constrain the construction sector.

The growth outlook for the construction industry has fallen due to economic turbulence, with an expected late-2025 surge of starts delayed. Private investment will return unevenly as stakeholders assess changing priorities and public support, limiting construction demand.

As disruptions vary significantly by sector and location—with select industries maintaining robust activity—the underlying impact is more complex. Critical sector investments ensure opportunities remain, though delays will alter their shape and timing.

Trade policy upheaval has transformed the cost environment in six months and prices are now on pace to see a significant increase. Trade policy impacts have not been fully manifested yet and uneven effects are expected based on regional pipelines, production access and sensitivity.

Further, sectors are not equally exposed to impeding increases. Mechanical and electrical components required for advanced building systems are disproportionately imported. As these are critical features of data centers and other active sectors, coordinated demand will keep costs high and growing as current stockpiles deplete.

Construction has long relied on foreign-born labor as a partial solution to structural deficiencies in the labor force. Impacts of limited immigration and accelerated losses will be moderated by slower activity now, but punishing as starts return to normal levels.

Geographic differences in reliance and enforcement will reshape project viability, timelines, and wage premiums. This workforce rebalancing will shift development patterns, particularly impacting future growth in Texas as well as disaster recovery in California and Florida.

Strategic activity pulling ahead

Policy outcomes will likely become clearer, but sluggish starts now will have a lasting effect on construction. Forward-thinking organizations are already solidifying revised capital plans and are implementing flexible approaches to procurement, labor sourcing, and project timelines.

Material markets will find a new equilibrium

Expect the trajectory of material prices to vary by category. Trade policy impacts will differ substantially by cost category, with mechanical and electrical components facing greater exposure to tariffs, and higher demand, leading to more aggressive cost increases for dependent sectors.

A new pattern for a new development cycle

Construction activity will accelerate unevenly across regions. Commercial activity is strengthening in specific markets while industrial construction shows divergent regional patterns, with data centers and advanced manufacturing driving growth despite broader hesitancy.