The Broad Expansion topping-out ceremony on May 13, 2026. Photo: Owen Kolasinski, courtesy The Broad.
The AIA’s latest Consensus Construction Forecast has projected a 0.3% decline for U.S. nonresidential building construction spending in 2026 amid continued economic uncertainty and uneven performance across sectors. The forecast characterizes the market as “K-shaped,” with sectors tied to public funding, healthcare demand, and artificial intelligence investment outperforming interest rate-sensitive sectors.
Through the first five months of 2026, nonresidential building construction spending fell 7% in nominal terms compared with the same period in 2025, following a 2% decline in 2025 to $846 billion. Institutional construction remains one of the strongest-performing sectors. After increasing 1.9% in 2025, institutional spending is forecast to rise 2.8% in 2026 and 2.7% in 2027, with healthcare and recreation projects expected to lead growth.
Extract from the AIA’s latest Consensus Construction Forecast. The interactive data is available to view here.
Manufacturing construction received the largest downward revision, with spending now projected to fall 11.6% in 2026 after declining 6.7% in 2025. The forecast attributed the slowdown to reduced public investment following earlier federal funding initiatives, alongside uncertainty surrounding tariffs and long-term capital investment decisions.
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Commercial construction, meanwhile, is expected to increase 4.8% in 2026 and 5.8% in 2027, largely driven by continued expansion of data centers. Excluding data center projects, the forecast would instead indicate a 1% decline in commercial spending this year.
The report also points to persistent high interest rates, inflation, tariffs, labor shortages, geopolitical uncertainty, and rising oil prices as factors weighing on construction activity. In addition, earlier this week we reported that the AIA’s Architecture Billings Index has continued to indicate weak demand across much of the nonresidential market despite sustained project inquiries.
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Digging deeper into their characterization of a K-shaped market, the forecast noted that data centers, hotels, health care, and amusement and recreation projects are growing the strongest. Meanwhile, the bottom arm of the K-shaped economy contains retreating categories including traditional offices, warehouses, and manufacturing. The remaining sectors “treading water” are retail and education.
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