United States Commercial Construction Market Size

US Commercial Construction Market Analysis

The United States Commercial Construction Market size is estimated at USD 171.26 billion in 2024, and is expected to reach USD 203.5 billion by 2029, growing at a CAGR of 3.51% during the forecast period (2024-2029).

Despite inflation and labor shortage, the demand for commercial real estate continues to drive the market. Furthermore, the market is driven by the huge investments pouring into infrastructure building in the country.

• Overall, the commercial construction industry had a good year in 2021. Construction spending increased due to high spending in residential construction; however, the non-residential segment fell for the second year in a row. Construction firms also had to deal with ongoing labor shortages and delays in receiving building materials due to supply issues and rising material prices. Through November 2021, construction spending totaled USD 1.46 trillion, setting the year to another record-high for construction put-in-place.
• Infrastructure spending will be one of the top areas for growth in construction in 2022. With the USD 1.2 trillion Infrastructure Investment and Jobs Act, Congress finally passed a long-term infrastructure bill after years of stopgap measures and short-term spending bills. Over the next five years, the federal government will invest USD 550 billion in new infrastructure construction and repairs to existing infrastructure. The bill proposes investing USD 110 billion in roads, bridges, and infrastructure projects, USD 40 billion in bridge repairs and replacement, USD 39 billion in public transportation, USD 66 billion in passenger and freight rail, USD 65 billion in broadband internet, USD 65 billion in electric grid reconstruction, and USD 55 billion in water infrastructure.
• During the pandemic, the non-residential building market did not see a similarly dramatic increase in construction services. To be sure, some industries experienced rapid growth, such as warehouses and data centers, but these were offset by more pervasive laggards, such as office buildings and hotels. Construction, like so many other industries, was harmed by brittle supply chains and a shrinking labor force. Building material prices skyrocketed, with lumber, for example, rising as much as 264% from pre-pandemic levels at one point. Furthermore, product lead times continued to skyrocket, with three and four times the pre-pandemic rates not uncommon. To combat rising prices, the Federal Reserve has raised the federal funds rate aggressively, with four hikes in 2022 to date.
• According to the resources, inflation and lead times for certain building materials are finally easing. Construction spending in six sectors-manufacturing, highways, transportation, multifamily housing, lodging, and communications-is expected to increase by at least 5% in 2023, according to the firm. Other sectors, including healthcare, public safety, education, and commerce, are expected to grow by 0-4%. Lead times for other materials, such as architectural interiors, lumber, and plumbing, have also decreased. In the case of plumbing pipes, raw material availability has improved, production has increased, and residential construction demand has decreased.