Industry Insights for 2025
BY A.D. THOMPSON
A new not-new president-elect. An ongoing labor shortage. Positive gains in the realm of regulations. Uncertainty as the industry waits to see what will happen with immigration, and what the cost of doing business will be as the prospect of tariffs loom large.
Is the membership feeling optimistic? Is there trepidation?
“It’s very much a mix,” said Ken Simonson, chief economist, AGC of America.
As the new year takes shape, there is always much on the minds of the membership. What’s worth considering?
In the wake of a historic presidential election and with input from contractors nationwide, the pros weigh in.
Data is Dynamic, Housing Halts for Now
Where housing, multifamily in particular, was hot, the market has flattened, but data centers, said Simonson, are still going strong.
“That trend will continue,” he noted, “along with that of manufacturing plants, solar and utility-scale battery storage.”
Infrastructure, finally and steadily, will start to simmer as money turns into contracts for work around the country.
Notable here, the bipartisan support of infrastructure bills that were passed under the Biden administration, most of which should remain on target according to Alex Etchen, AGC’s vice president of government relations, who discussed this, among other topics, in a recent post-election webinar.
“There was a very high amount of multifamily housing being constructed at the same time, which has meant that a lot of that has come on the market at the same time,” Simonson pointed out. “There’s a glut. Rents have flattened or even declined in some of the hottest markets, and at the same time, developers have found that banks have been much less willing to lend.”
Even so, Simonson believes it will work itself out over the next year.
“The markets that were previously growing are going to again be good candidates for multifamily by 2026. We’ve been under-building housing, whether single or multifamily, rental or owner-occupied, for about 15 years now. There’s still underlying demand.”
On net, however, construction, he projects, should still be on the rise in 2025.
What We Don’t Know….
While the overall market remains positive, uncertainty in the wake of the presidential election has construction pros in wait-and-see mode.
Two issues, immigration and tariffs, are the big question marks, said Simonson.
“The industry relies on many foreign-produced products, materials, components,” he pointed out. “And it certainly relies more heavily on foreign-born workers than other sectors.”
New tariffs, obviously, could force prices up quite sharply. There could be supply-chain interruptions. And labor, of course, has been the No. 1 challenge for most contractors for decades.
“If the borders are tightened, and certainly if people who have been here are deported or frightened out of working at identifiable jobsites, that will worsen the labor force problem for the construction industry.”
Labor Gains?
Ian Warner, however, feels like despite these challenges, the workforce pendulum is swinging back in construction’s favor.
“I’m very optimistic,” said Warner, director of industry workforce development and innovation for Trimble, Inc., a General Building Contractors member, which specializes, in part, in industrial technologies.
“The trades are becoming more of a valued career opportunity for high schoolers and young adults and people who are looking to transition careers.”
The momentum, he believes, is shifting in the ways the training entities, from K-12 programs to union and non-union centers, are able to showcase what a construction job is and can be.
Twelve years ago, when he started his Trimble tenure, Warner estimates that between 1-10% of companies, depending on the region, were embracing technology workflows.
“Now, it feels like we’re in the 40-50% range,” he said, “with firms employing robotic total stations, laser scanners, mixed reality modeling, virtual estimating.”
With more tech than ever in the education mix, a greater number of students are gravitating toward AGC-centric industries.
“People who wouldn’t necessarily have been attracted to construction or geospatial or trucking are having these discussions now. They see it not only as a basic career opportunity, but an opportunity to create their own businesses, to move up into management.”
While Simonson says it’s too early to speculate about Gen Z numbers in the construction workforce, he does believe that the industry is making a greater effort to connect not only with students, but teachers, guidance counselors, and workforce development agencies to send positive messages about careers in the field.
“It continues to be a hard sell,” he said, but noted that the Bureau of Labor Statistics figures show that construction has been adding workers at a faster rate than the broader economy.
“Clearly, they’re doing something right.”
Regions and Regulations
Contractors are hopeful about seeing less federal regulation and a continuation or even a reduction in the tax relief that was passed back in 2017, Simonson speculated.
“These are two positives the industry is expecting,” he said.
As for top markets, it’s an ever-shifting landscape, but one where population growth and movement, along with the local economic circumstances, is always a deciding factor.
“Both of those favor Texas,” Simonson said.
It’s a top three state for population growth. It has a business-friendly reputation. And there’s still a lot of land available.
Beyond the Lone Star State, markets including Phoenix, Nashville, Charlotte, and several Florida metros are geared for growth. But there’s a dark horse in the mix, too.
“Columbus, Ohio, has attracted not just a giant semiconductor fabrication plant, but also a large number of data centers, manufacturing venues, and it’s home to one of the largest, most successful universities,” said Simonson. “It’s also a state capital.”
There are many reasons to watch it, he noted, for continued activity in institutional and public construction.
Wage Watch
Despite the potential positive growth on the labor front, Simonson says construction execs should expect to see wage rates continue to rise and at a higher level than the broader economy.
“It’s not just wages, either,” he said. “It’s the cost of finding and training workers and what will need to be done to retain them and improve their skills.”
These costs, he speculated, might be even higher amid the new political lineup, “particularly if immigration is shut off and people, even those legally in the country, are no longer feeling safe and willing to show up at construction jobsites.”
PAC Mentality
It’s high-spirited.
“Election night was a very good night for the candidates our PAC supported,” said Etchen, noting that the association’s bipartisan Political Action Committee saw many wins.
“AGC’s PAC pulls voluntary personal donations from eligible AGC member company employees and uses these funds to help elect Democrats and Republicans to the House and Senate who support pro-construction, pro-business policies,” he explained.
In this past cycle, a record-breaking more than $1.2 million has thus far been employed to support candidates in 231 races, which accounts for roughly 43% of the Congress.
Election night saw 213 AGC-backed candidates on the ballot. And at press time, 197 of them won.
“That gives us a 92% success rate this cycle – a pretty good number when you’re looking at this many races and this many candidates in an election cycle that saw so many changes.”
Overall, said Simonson, members should feel positive, if cautiously so.
“I think the outlook for a more favorable business tax and regulatory climate has improved since the election,” though it is balanced by the questions about immigration and tariffs.
“Business should expect a continuation of economic growth, job growth and also some disruptions and changes in priorities in terms of what government is going to be trying to do and sectors of the economy that are going to thrive or struggle.”
A Republican trifecta, said AGC CEO Jeff Shoaf in a post-election webinar, makes for “a significant change of who’s in power. The dynamics in Washington, D.C. have certainly been altered, and there’s plenty of work ahead for our lobbyists who need to get to know who the new players are, who was promoted to bigger spots in the capitol or in agencies.”