Value of private nonresidential construction

The value of private nonresidential construction is projected to reach $689.3 billion in 2025, representing a 1.9% increase from the previous year. Growth in 2025 has continued to moderate due to elevated interest rates, which have increased financing costs and constrained some developer activity. However, ongoing demand for data centers, steady investment in commercial spaces, and adaptations to technological trends have sustained spending within the sector. The lingering impact of pandemic-era shifts, such as continued hybrid work patterns, has selectively influenced demand across different property segments, with some recovery in office construction noted as more businesses encourage in-person attendance.

Between 2020 and 2025, the value of private nonresidential construction rose at an average annual rate of 3.3%. The period began with significant pandemic-induced declines, as uncertainty and reduced business investment led to a contraction in 2021. Construction values reached a low of $569.6 billion in 2021, reflecting both health crisis impacts and delays in private investment. Growth resumed in subsequent years, supported by historically low interest rates, stimulative fiscal policies, and a sharp recovery in market confidence. The CARES Act of 2020 and the American Rescue Plan Act of 2021 together injected over $4.0 trillion into the economy, directly supporting businesses and indirectly boosting demand for new commercial, retail, and healthcare facilities. Healthcare construction was particularly resilient, responding to heightened demand for medical infrastructure during the crisis.

From 2023 onwards, a sharp uptick in nonresidential construction occurred as businesses sought to capitalize on favorable financing conditions. The value climbed from $654.3 billion in 2023 to $676.3 billion in 2024, and then to $689.3 billion in 2025. Nevertheless, growth moderated as the Federal Reserve implemented interest rate hikes, initially to contain inflation, which subsequently raised borrowing costs and resulted in a slowdown in construction in 2024. Notably, the office market remained subdued, with many companies opting for hybrid or remote work arrangements. Warehouse construction, buoyed by e-commerce expansion, also began to plateau toward the end of the period as overbuilding became a concern.

Macroeconomic factors such as rising material and labor costs, as well as the evolving regulatory landscape, have further influenced private nonresidential construction. Fluctuations in input prices, exacerbated by supply chain disruptions and tightening labor markets, have contributed to project delays and increased construction costs, impacting margins and growth. Overall, growth in the value of private nonresidential construction from 2020 to 2025 has been shaped by a recovery from pandemic-era lows, fiscal stimulus, evolving workspace trends, and a transition to a higher interest rate environment.