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As we embark on the year 2026, the construction industry is settling into a year that will be defined more so by strategic adjustment rather than rapid growth. While market conditions have largely stabilized compared to the turbulence we experienced in the first half of the decade, this year looks to be one that will reward careful planning, early decision making, and close collaboration amongst owners, designers, and contractors. Based on national insights from the AGC of America and regional trends from the AGC of Ohio, the industry outlook for 2026 can best be described as selective growth paired with lingering operational challenges. As always with our industry update, we will focus our attention on construction demand, cost, and workforce, as well as provide insight into some of the best approaches to construction projects in 2026.
Regional Update
First, it’s important to provide an update on how we see things changing locally in our northeast and central Ohio region, and how our clients and projects are affected. With the influx of national funds from sources like ARPA as well as some other state-wide initiatives, we’ve seen many projects being given the green light by clients so that they can meet their spending deadlines. With these projects moving forward we are also seeing a positive impact on contractor availability. Recently, the pre-bid meetings for many of our projects have attracted over 20 contractors in attendance, in turn resulting in nearly 5+ bids for private projects and over 10 bids for some public projects. These are all positive signs that indicate strength in the local construction economy across all facets – demand, cost, and workforce. Therefore, while some construction sectors may be experiencing slowdowns as indicated later on in this update, our local businesses remain confident that workload and demand will carry us strong through 2026.
Construction Demand
Construction demand entering 2026 remains present, though less consistent across the board compared to prior years. Certain sectors—particularly data centers, energy and power infrastructure, and advanced manufacturing—continue to see strong investment and growth. These projects represent a large portion of new construction activity and can sometimes even influence labor availability in those areas given the amount of resources they require.
At the same time, other segments such as office, retail, and some education projects are experiencing slower growth while owners weigh financing costs and long-term space needs. As a result, we are seeing more deliberate project initiatives and planning, with owners placing greater emphasis on project feasibility and return on investment before moving forward.
Overall, construction demand is standing its ground with a few key sectors leading the way, and contractors are optimistic about current and upcoming workload. In fact, nearly 70% of contractors indicated that their current backlog is either larger (39%) or similar (29%) to a year ago. Only 30% noted that their backlog is smaller than it was a year ago. So, even with the cooling demand in some sectors, contractors remain confident that work is currently available and will continue to be. (AGC and Sage)
Construction Cost, Input Prices, and Lead Times
One of the most frequent questions we hear from clients is whether or not construction costs have “returned to normal” yet. The short answer is that prices are not nearly as volatile as they were in previous years, but they do continue to increase. Direct construction costs are no longer driven so much by supply-chain issues and material shortages as they are now by tariff regulations and regular input costs like raw materials and transportation. This has contributed to the “leveling off” of most price hikes and volatility, while returning to standard 2-5% increases per year. Here is the list of materials that we’ve been tracking over the past few years with this industry update (percent changes are from Nov 2024 to Nov 2025, and the overall increase from Jan 2020):
Concrete: down 0.7%. Up 37% from January 2020. Precast concrete is a bit different, increasing 7.2% from 2024 to 2025 and 50% since January 2020.
Wood/Lumber: down 1.3%. Up 27% from January 2020.
Steel: up 4.6%. Up 55% from January 2020.
Pre-Engineered Metal Buildings: small increases during 2025, around 4-5%. Mostly a result of tariff regulations and material demand.
Glass: up 3.3%. Up 30% from January 2020.
Aluminum: up 28%. Up 63% from January 2020. Aluminum is one of the wildcards that is hugely affected by tariff regulations. Over half of the aluminum that is used in the United States is imported, with significant amounts coming from Canada and China, where tariffs were some of the highest.
Labor: following typical 4-5% increases per year, relatively stable. Many contractors continue to note this as one of their biggest concerns.
LEAD TIMES:
Concrete: minimal issues, if any. Typically readily available. Precast items can be 2-6 weeks.
Steel: minimal issues, lead times are within expected time frames. Anywhere from 2-12 weeks depending on sizes, shapes, manufacturer, and location.
Pre-Engineered Metal Buildings: minimal issues, within expected 2-6 month time frames depending on size, shape, location, etc.
Roofing: minimal issues, if any.
HVAC Equipment: minimal issues for standard equipment. Specialty equipment is back within expected timeframes as well, though can sometimes push the 8+ week range.
Electrical Gear/Equipment: still noted as a persistent issue across the industry. Electrical gear, especially specialized items, still carry extended lead times. It is not uncommon to see lead times nearing 12 months for large-scale, specialized electrical equipment. Small-scale, standard equipment can be 8-12 weeks.
Glass and Aluminum: minimal issues, though specialty items may be troublesome.
Water Piping (Ductile Iron): minimal issues, standard lead times on standard sizes.
For indirect costs (often referred to as soft costs), higher interest rates and insurance costs require a bit of creativity from the project team to be able to counteract their effects. From a project delivery standpoint, owners who engage design and construction teams early continue to see the most success in managing costs. Early collaboration allows teams to identify alternatives, evaluate phasing options, and address long-lead items before they become schedule or budget risks.
Construction Workforce
Three out of the top four concerns noted by construction firms heading into 2026 are workforce related, as indicated by the Hiring and Business Outlook from AGC and Sage. Worker supply, cost, and quality were numbers two, three, and four on the list, respectively. Contractors across the country continue to report difficulty filling both skilled trade and management positions, which can directly impact project schedules if not accounted for early. And the labor force is simply not being replenished at the rate required to keep up with the current aging demographic.
In response to these challenges, many firms—including ours—are increasing investments in training, retention, and technology. Digital tools, AI-supported workflows, and enhanced coordination platforms are being used more frequently to improve efficiency and reduce administrative burdens, helping teams stay focused on quality and delivery.
Though it may seem dire trying to find workers, firms still report being optimistic about adding to their workforce in 2026, similar to last year’s sentiment. Over 60 percent of companies plan to add to their labor force to meet the current and upcoming project workloads. (AGC and Sage) While the labor pool continues to get thinner, it appears that demand for workers will stay steady for now, with Ohio specifically increasing just over 5% from 2024 to 2025. (Simonson)
A Quick Note on AI
As artificial intelligence continues to firmly place itself at the center of industry innovation, firms are continuously encouraged to evaluate how it can be leveraged to provide value to the firms and their clients. From streamlining repetitive, document-heavy tasks like submittals, RFIs, and change orders, to more intelligent project management platforms that can predict project risk factors, AI is quickly becoming more than just a theoretical tool.
What This Means for Owners and Project Teams, and How We Are Advising Our Clients
The construction environment in 2026 favors projects that are well-planned, collaborative, and adaptable. While opportunities remain strong in the right sectors, success increasingly depends on aligning expectations early and managing risk throughout the project.
From our perspective as a design and construction management partner, the most successful projects this year will have these traits in common:
As always, our goal is to help clients navigate these conditions with clarity and confidence—transforming industry challenges into opportunities for smarter, more resilient project outcomes. As always, if you have questions or need professional guidance, please reach out and let us know how we can assist you with your projects!
Works Cited
Associated General Contractors of America, and Sage. ‘Dampened Expectations: The 2026 Construction Hiring and Business Outlook.’ Associated General Contractors of America, 8 Jan. 2026.
King, A. (2026) ‘2026 Construction Outlook’, Constructor, January.
Simonson, K. ‘Construction Outlook: What’s in the Mix for ’26?’, The Associated General Contractors of America, November 2025.
Simonson, K. (2025 November). Average annual percentage change construction materials 2025_Nov. Associated General Contractors of America.
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