United States Commercial Construction Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

United States Commercial Construction Market Trends and Insights

E-Commerce Expansion Fuels Warehouse and Fulfillment Construction

E-commerce continues to steer location and product mix decisions as large retailers expand logistics footprints and push for speed-to-customer gains that require high-throughput facilities in core corridors. Amazon signed 31 million square feet of new leases in 2024, announced a USD 15 billion logistics expansion, adding nearly 80 facilities, and is positioned to capture around 25% of new industrial leasing in 2026. The U.S. delivered 146.6 million square feet of industrial space by mid-2025, with 341.8 million square feet under construction, while vacancy rose to 7.1% and signaled that supply was catching up to demand in select markets. Reshoring and nearshoring patterns amplify demand as 69% of U.S.-serving supply chains are projected to be Americas-based by 2026, up from 59%, supported by stronger U.S.-Mexico trade flows since 2018 and an upswing in nearshoring investment during early 2025. Within cold-chain logistics, online grocery is set to reach USD 100 billion in 2025, yet the nation’s 220 million square feet of refrigerated space trails demand by 75-100 million square feet, a gap that is prompting large-scale investments like New Cold’s USD 300 million expansion in Lebanon, Indiana. This divergence between standard warehouses and temperature-controlled facilities is sustaining rent premiums for specialized assets and rewarding developers with vertical integration or in-house MEP capabilities that manage complexity and cost.^{[2]https://www.commercialcafe.com/blog/us-industrial-2025-midyear-report}

Hybrid Workplace Pressures Drive Office Retrofit and Adaptive Reuse

Corporate occupiers are channeling capital into quality over quantity to support hybrid models, wellness, and energy performance in their workspaces. Only 14% of the global workforce prefers a traditional corporate office, while 60% of organizations plan to increase spending on design, fit-out, and refurbishment, a shift that favors adaptive reuse and targeted upgrades. Retrofit pathways can cost 30-50% less than ground-up builds and speed occupancy, illustrated by JPMorgan’s 270 Park Avenue, a 2.5 million square foot all-electric skyscraper delivered in October 2025 that demonstrates high-performance design at scale. Conversion economics are strengthening as Gensler estimates around 34% of US office buildings can be repurposed to residential use at 30-40% below new-build costs, with Historic Tax Credits mobilizing billions in private capital for older downtown assets. Even as the national office vacancy rate reached 18.6% in late 2025, LEED-certified Class A properties command rent premiums that reinforce the business case for high-performance retrofits and high-quality tenant improvements. These dynamics keep retrofit pipelines active and position adaptive reuse as a resilient lever in the US commercial construction market through the forecast window.^{[3]https://www.gensler.com/research-insight/gensler-research-institute/global-workplace-survey}

Data Center Construction Accelerates Amid AI and Cloud Compute Demand

AI, cloud, and edge workloads are reshaping location, design, and grid interface requirements for mission-critical projects. U.S. data center capacity is projected to grow roughly 10% annually through 2030 to reach the mid-30 gigawatt range, and nationwide electricity consumption attributed to data centers could rise from around 4% in 2025 to 7.5% by decade end. Mega-campuses are multiplying, including a USD 15 billion program for Vantage in Wisconsin and a USD 4 billion Microsoft project in Mount Pleasant, while sector construction spending is projected to peak at USD 89 billion in 2026, up sharply from 2022. Power delivery is the bottleneck as ERCOT expects double-digit demand growth in Texas by 2026, grid operators expand 345-kilovolt and 765-kilovolt corridors, and the Department of Energy advances plans to add or upgrade 100,000 miles of transmission this decade. Execution risk is most evident in utility interconnections and permitting, where 12-24 month timelines are common and local entitlements can add months to preconstruction before notice to proceed, especially for projects that require additional on-site power or storage. These projects remain a central growth engine for the US commercial construction market as developers adjust capital stacks to reflect longer lead times for power and procure switchgear, transformers, and cooling systems earlier in the schedule.

Public Infrastructure Investment Sparks Transit-Adjacent Commercial Growth

The Infrastructure Investment and Jobs Act provides USD 1.2 trillion over five years, which includes USD 550 billion in new federal spending as states move projects through procurement and contracting cycles. By late 2025, the Department of Transportation reported USD 411.5 billion in announced grants and USD 343.3 billion obligated with USD 189.1 billion outlayed, a cadence that signals an acceleration phase in 2026. Highway programs are driving more than 70,000 new federal-aid commitments and pushed contract awards up 36% in 2023 versus 2021, while the General Services Administration allocates USD 3.4 billion to modernize Land Ports of Entry that support cross-border commerce. Transit-adjacent commercial is clustering around catalysts like New York’s SPARC Kips Bay and Willets Point, which leverage public dollars to draw private investment for mixed-use hubs with proximity to rail and subway links. State-level momentum includes a USD 39.92 billion TxDOT budget for fiscal 2026-2027 that underpins backlogs and aligns with a broader decade-long transportation program that sustains contractor activity across Texas. ESG policy is also shaping specifications as California’s climate disclosure mandates take effect in 2026, reinforcing decarbonization and resilience requirements in municipal procurement.

Skilled Labor Shortages and Wage Pressure Slowing Project Delivery and Increasing Costs

Meeting 2026 demand requires recruiting 499,000 new workers after a shortfall year where most firms reported difficulty filling craft roles and an aging workforce pointed to higher retirements through the decade. Employers report the tightest gaps in specialized trades and estimating, which creates scheduling bottlenecks and increases reliance on overtime, incentives, and per diem policies that push project labor costs higher. Average hourly earnings in construction reached USD 38.76 by March 2025 and were up 4.5% year over year, while the sector paid more than manufacturing and transportation to compete for talent and retain crews on critical paths. Mission-critical work, such as data centers, pays premium rates that can pull electricians and HVAC technicians off other commercial sites and exacerbate staffing challenges for hospitals, schools, and civic projects. These pressures are broad-based, and they have led to measurable delays and potential output losses that reinforce the case for prefabrication, improved field productivity tools, and targeted training pipelines.

Financing Constraints and Loan Maturities Slow Speculative Development

Interest rates remained elevated through 2025 as the Federal funds rate held in the 4.25-4.50% range, and lenders tightened underwriting by asking for higher equity and debt service coverage above 1.25. Under these terms, a USD 100 million project financed over 10 years can add more than USD 15 million in interest expense compared to the low-rate era, which reduces feasibility for speculative starts in office and select retail formats. A loan maturity wall of USD 600 billion in 2024 and USD 500 billion in 2025 forced many owners to refinance at higher rates, and some downtown projects struggled to pencil, prompting ownership transitions on weaker assets. Hospitality financing conditions improved marginally as rate expectations eased, which supported selective new construction and acquisition pipelines in late 2025 and early 2026. Capital costs remain a key swing factor for the US commercial construction market in 2026 as developers weigh interest rate paths, absorption risks, and tighter loan structures against favorable long-term demand in data centers, logistics, and public works.

Segment Analysis

By Commercial Sector Type: Industrial & Logistics Claims Fastest Expansion

Office construction held 35.10% of the US commercial construction market share in 2025, supported by hybrid workplace upgrades and adaptive reuse strategies that often deliver occupancy sooner and at lower cost than new towers. Growth is uneven across office segments as companies prioritize high-performance buildings with modern systems and certifications that align with tenant expectations and ESG commitments. Within the US commercial construction industry, the industrial and logistics segment is the fastest-growing, with a 5.44% CAGR through 2031 as fulfillment needs, reshoring momentum, and cold-chain expansion continue to absorb new space and sustain build-to-suit activity. Developers are tracking the split between commodity warehouses and specialized facilities such as temperature-controlled storage and high-power data centers that command premium rents but require early procurement and more complex MEP coordination. This segmentation is converging near rail, highway, and power infrastructure, further tightening site selection filters in core markets.

The demand profile is reinforced by Amazon’s multi-year expansion and broader leasing momentum among third-party logistics, which shape land prices, entitlement timelines, and construction schedules in high-growth corridors. Industrial deliveries and the pipeline reported by mid-2025 were high by historical standards, while vacancy increases indicated a healthier balance in certain submarkets that may moderate rent growth but still favor well-located assets. Data center spending is projected to peak at USD 89 billion in 2026 and has become a core driver of mission-critical work that shapes contractor backlogs and subtrade availability. These conditions keep industrial and logistics at the center of the US commercial construction market, with risk management focused on grid access, long-lead equipment, and entitlements for large-format projects.

Note: Segment shares of all individual segments available upon report purchase

By Construction Type: Renovation Gains Momentum Over New Builds

New construction accounted for 68.10% share of the US commercial construction market size in 2025, supported by data centers, industrial facilities, and select hospitality and mixed-use towers across high-demand metros. Renovation is growing faster at a 5.20% CAGR during 2026-2031 as owners seize the cost and time advantages of repurposing existing assets, often with support from Historic Tax Credits that have catalyzed significant private investment over time. Within the US commercial construction industry, retrofit programs are expanding in office, hospitality, and education as corporate and public owners target lower embodied carbon, improved energy performance, and healthier interiors aligned with LEED v5. Brand-mandated hotel property improvement plans and office fit-outs with flexible floor plates are further lifting renovation pipelines and contracting opportunities for interior specialists. Contractors are planning for abatement and structural upgrades common in older buildings, which require disciplined preconstruction to de-risk budgets and timelines.

City-led conversions and incentive programs in New York and Chicago underscore how municipal policy can unlock downtown reuse at scale by combining zoning with tax-increment financing and targeted grants. Large owners also demonstrate the viability of high-performance retrofits, exemplified by marquee projects that align with electrification and carbon goals now common in institutional portfolios. As procurement moves toward whole-building life-cycle assessments, renovation programs that preserve structure and reduce embodied carbon gain an edge in public bids and corporate governance reviews. The US commercial construction market is therefore set to see renovation capture a larger share of pipeline dollars through 2031, with supply chains adapting to the material and system profiles common in deep retrofits.

By Investment Source: Public Funding Surges on Infrastructure Act

Private investment constituted 85.20% of spending in 2025 across offices, industrial, hospitality, and data center builds financed by REITs, private equity, and corporate balance sheets. Public funding is the fastest-growing source with a 5.60% CAGR through 2031 due to IIJA allocations that continue to move into contract awards and outlays for highways, bridges, transit, and ports. Within the US commercial construction industry, these public projects create spillovers for transit-adjacent mixed-use developments as states and cities rezone nodes to capture private capital near rail stations and interchanges. Federal Land Ports of Entry and other civic facilities are also mobilizing design-build teams and specialty contractors, adding to a baseline of work that stabilizes backlogs through 2026. The public cycle helps offset tightening private credit conditions in select property types and supports regional contractors that specialize in transportation and civic work.

Obligation and outlay data confirm acceleration, with USD 411.5 billion in announced grants, USD 343.3 billion obligated, and USD 189.1 billion outlayed by late 2025, which implies strong bid opportunities for the year ahead. FHWA reports more than 70,000 new federal-aid project commitments and higher-than-average growth in contract values compared with pre-IIJA norms, reinforcing a durable foundation for vertical construction near upgraded corridors. Cities like New York are using public investments to leverage private development in life sciences and housing, which supports construction labor continuity and materials planning across the cycle. State programs in Texas add to this momentum with a USD 39.92 billion TxDOT budget that underwrites multi-year highway work and keeps heavy civil capacity engaged. Procurement compliance and Buy America rules remain important schedule variables, which contractors address through early submittals and supplier vetting to reduce lead-time risks on federally funded work.

Geography Analysis

Texas leads with 17.00% in 2025 on the strength of hyperscale data centers, semiconductor fabrication plants, and a USD 39.92 billion TxDOT budget for fiscal 2026-2027 that sustains construction backlogs tied to corridor upgrades. Florida is the fastest-growing state at a 5.45% CAGR from 2026 to 2031, powered by hospitality recoveries and convention center expansions that feed adjacent retail and mixed-use activity. California holds the second-largest share as nonresidential spending advances and IIJA inflows add visibility to public project pipelines across transportation and education infrastructure. New York’s three-year construction spending plan and MTA allocations are tilting the mix toward nonresidential projects while NYCEDC initiatives like SPARC Kips Bay draw private capital into transit-connected clusters. Illinois is scaling mixed-use, institutional, and bridge programs in Chicago that reinforce multi-year activity across commercial and heavy civil scopes.

The US commercial construction market is benefiting from diversified geographic engines where Sunbelt states absorb logistics and manufacturing demand while coastal markets move public infrastructure and select high-specification towers. Texas continues to capture mega-capital projects that require grid, water, and highway coordination, which supports both vertical and horizontal contractors in 2026. Florida’s hotel and entertainment pipeline remains active, and selective supply responses support project returns even as labor and materials stay tight in certain metro areas. California’s pivot toward civic and education projects reflects permitting complexity and cost structures in private development, yet maintains a consistent workload for large general contractors and specialty subs. New York and Illinois both demonstrate how public investment and zoning can catalyze private mixed-use and life sciences proposals around station areas and corridor upgrades.

States beyond the top tier are gaining share in specific niches. Wisconsin and Virginia are building data center capacity as utility plans and land availability align with campus-scale projects that require long lead times and early procurement of key electrical components. Arizona, Georgia, and North Carolina are securing advanced manufacturing investments due to incentive programs and ease of permitting compared with select coastal markets, which shifts supply chains and subcontractor networks toward these corridors. The US commercial construction market size tied to Florida is projected to expand at a 5.45% CAGR through 2031, reflecting durable tourism and convention demand layered on top of roadway and port investments. Texas maintains a stable growth path as semiconductor, biomanufacturing, and data center ecosystems deepen and reinforce commitments to infrastructure and power projects. New York’s public-private model is set to continue as agencies focus on signal modernization, accessibility, and station-area placemaking that unlocks mixed-use towers in boroughs with strong transit.