But beyond recognizing exceptional work, the data behind these projects may also offer a roadmap for delivering better outcomes across the broader construction industry.

Can the performance metrics from award-winning projects help owners, designers and contractors make decisions that lead to safer jobsites, stronger budget performance and more predictable schedules? According to ABC’s growing EIC data set, the answer appears to be yes.

Over the past several years, ABC has enhanced and automated the EIC application process, enabling the organization to capture and analyze detailed project-performance data across hundreds of projects nationwide. The findings reveal several clear trends among top-performing projects: value-based procurement dominated over low bid selection; preconstruction services consistently improved schedule reliability; and contractors investing in technology and early collaboration often delivered stronger safety and budget outcomes.

The 2025 EIC portfolio—recognized at ABC Convention 2026 in Salt Lake City—provides one of the clearest pictures yet of what project excellence looks like in practice.

The portfolio includes 341 national-level projects totaling $15.09 billion in construction value, representing 38 million work hours, 48 million square feet of construction and 3.6 million acres of developed land. The projects span every major market sector, including data centers, healthcare, multifamily, petrochemical, institutional, renewable energy and aviation.

Collectively, the projects achieved a total recordable incident rate of 0.68—70% below the 2025 industry average TRIR of 2.3. Ninety-eight percent finished within the final contract budget despite collectively overcoming 2,647 days of delays. Across the portfolio, contractors deployed a wide range of technologies, including robotics, telematics, drones, virtual reality and artificial intelligence.

The data also challenges several longstanding assumptions about high-performing construction projects. While many EIC projects exceed $100 million in value, nearly 200 are valued below $20 million, suggesting the practices driving excellence are not limited by project size. The portfolio also demonstrates that merit shop contractors are successfully delivering large-scale, technically complex projects while achieving industry-leading safety performance.

Taken together, the portfolio significantly outperformed broader industry benchmarks in safety, budget reliability and schedule management—raising an important question: What were these projects doing differently?

The data points to several leading indicators that consistently show up in award-winning construction.

THE VALUE OF EARLY ENGAGEMENT

Project success begins with procurement strategy and the services purchased during project development.

All procurement methods were represented across both general and specialty contracting. However, 60% of projects were procured primarily on value- or qualification-based selection, while 40% were procured primarily on price. Of the price-based projects, half were awarded through select bidding processes involving prequalified contractors.

While much of the broader construction market still relies heavily on price-driven procurement, EIC projects skewed strongly toward qualification- and value-based selection (encompassing both the “value-based” and “solely negotiated” designations in the preceding and above infographics).

Every market sector selected contractors primarily on qualification at least 50% of the time. The high-tech/data center sector and renewable energy sector relied most heavily on qualification-based procurement, at 74% and 75%, respectively.

“Owners are increasingly seeing that selecting a construction partner based on best value, not just low price, leads to savings overall,” says Buddy Henley, president of Gaithersburg, Maryland-based Henley Construction. “Having a trusted partner engaged during design allows risks to be identified earlier and problems to be solved before they become costly. That early collaboration improves cost certainty, supports smoother schedules and significantly reduces surprises in the field.”

Government projects relied most heavily on open hard bid or price-based procurement, using that method 27% of the time. By contrast, the high-tech/data center market procured just 15% of projects through open hard bid.

Among general contractors, 74% were selected primarily on a qualification basis. Nearly one-quarter of those projects were solely negotiated, and those projects represented the highest average contract value at approximately $101 million.

“The most successful projects are the ones that bring the design team and construction manager together at the very beginning. Early collaboration improves constructability, clarifies scopes for the trades, and reduces gaps that create risk,” Henley says. “That early alignment leads to better budget predictability and stronger trade relationships, which directly supports safer and more successful projects.

When owners focus on value-based procurement instead of low bid alone, the outcomes are consistently stronger. Choosing teams based on experience, collaboration and the value they bring creates real partnership across the project. We see better cost control, higher-quality results and safer jobsites when the right team is selected from the start.”

Lorri Grayson, partner and founder of Rehoboth, Delaware-based GGA Construction, echoes Henley’s sentiments. “Early involvement creates an atmosphere of strong collaboration among project stakeholders. It enables the project team to define the scope of work, identify long lead items and, most importantly, control costs from the earliest stages,” she says.

“It also helps develop a bid strategy that responds to current market conditions. For example, early involvement on our current project, The Continental, located at the University of Delaware, saved the owner over $5 million on a $90-million project,” Grayson says. “Early coordination allowed us to identify critical procurement needs and minimize budget risks, resulting in a more efficient and cost-effective process.”

That emphasis on early collaboration and value-driven procurement was reflected throughout the EIC portfolio data. Just 18% of general contractor projects were procured through open hard bid, and those projects represented the lowest average contract value at approximately $15 million.

The owner perspective also supports early contractor involvement.

“Successful projects are built on strong partnerships rooted in trust, transparency and psychological safety—where titles are set aside and teams feel comfortable speaking openly to solve problems together,” says Spencer Moore, vice president and chief facilities officer for globally renowned cancer center UT MD Anderson. “Early collaboration creates that foundation, allowing teams to address challenges with humility and ownership before moving toward solutions.”

That same emphasis on qualifications, collaboration and long-term value also appeared in how specialty contractors were selected across the EIC portfolio. Specialty contractors were procured primarily on qualification 46% of the time, while 31% were selected through select bid and 24% through open hard bid. Contract value did not appear to significantly influence procurement methodology for specialty trades.

One of the more surprising findings in the data was that procurement strategy did not necessarily dictate contract structure. Regardless of how projects were awarded—whether through qualification-based selection, negotiated work or open bid—top-performing projects utilized virtually every form of contracting across the portfolio.

One notable distinction emerged between general and specialty contractors: Lump-sum contracting overwhelmingly dominated among specialty contractors regardless of procurement method.

THE PRECON ADVANTAGE

Across all market sectors, preconstruction services were provided on 74% of projects—well above what many contractors would consider typical across the broader marketplace. General contractors delivered preconstruction services on 73% of projects, while specialty contractors did so on 75%.

“Early involvement allows specialty contractors to contribute practical, experience-based insight before key decisions are locked in. When we’re engaged during preconstruction, we can identify coordination challenges early, help refine scope and sequencing, and offer practical yet innovative solutions to tough problems–reducing rework,” says Matt Terry, president of Dallas-based mechanical contractor TDIndustries. “That upfront collaboration directly improves schedule reliability, cost certainty and overall project performance.”

Steve Grauer, executive vice president for Hensel Phelps, agrees. “In my experience, the best outcomes to project success on complex projects are rooted in project teams that exemplify a high level of trust, practice transparency, have accountability, truly collaborate, and have a high level of executive commitment and engagement in the project and where there is open communication by all the stakeholders,” he says. “These traits are best embedded when project teams have some type of early engagement, giving them an opportunity to work collaboratively to resolve early challenges and work to build personal relationships prior to the start of construction.”

Notably, no preconstruction services were provided on 51% of projects procured through open hard bid.

While preconstruction services were utilized across all procurement methods and contract structures, the combination of open hard bid procurement and lump-sum contracting most frequently resulted in projects without preconstruction involvement.

Twenty-six percent of all EIC projects did not utilize preconstruction services, and 75% of those projects followed the open hard bid/lump-sum model.

FROM PLANNING TO PERFORMANCE

At a time when the construction industry continues to battle cost escalation, labor shortages and schedule disruption, EIC projects significantly outperformed broader industry benchmarks in safety, budget reliability and schedule management. The EIC portfolio overcame more than seven years of cumulative delays, delivering 98% of projects within budget and achieving a TRIR of 0.68.

The next question? Whether procurement methods, contract structures or preconstruction services contributed to those outcomes.

When comparing planned project duration to actual construction duration—including delay recovery—projects utilizing preconstruction services demonstrated stronger performance.

Projects with preconstruction services showed slightly better schedule outcomes overall. Fifty-two percent achieved shorter actual durations compared to projects without preconstruction services.

More importantly, projects with contractor involvement during preconstruction overcame more delay days and exhibited lower schedule variation.

Projects without preconstruction services experienced a 14% variance between planned and actual construction duration, including delays.

The same trend appeared across contract structures. Lump-sum contracts—which included preconstruction services on only 47% of projects—experienced an 11% variance between planned and actual duration. Construction manager-at-risk projects, where preconstruction services were included on 96% of projects, experienced only a 1% variance.

The trend became even more pronounced among general contractors. Design-build and CMAR delivery methods significantly reduced schedule duration variance compared to lump-sum and time-and-materials contracts. This aligns with the fact that design-build and CMAR projects incorporated preconstruction services on 90% and 96% of projects, respectively.

“The biggest gains we see come under the construction-manager-at-risk approach. Early cost validation during design helps identify savings without sacrificing quality,” explains Henley. “Clarifying scopes and resolving issues early reduces financial risk and improves safety across all trade partners.”

Among specialty contractors, preconstruction services also reduced schedule variation regardless of procurement method or contract type. Projects without preconstruction services experienced a 25% schedule variance. When specialty contractors participated in preconstruction, that variance was reduced by at least half.

Although 98% of EIC projects finished within the customer’s final approved budget, variation still existed between original and final contract values through approved change orders.

Projects utilizing CMAR and design-build delivery methods experienced lower budget variation than lump-sum and time-and-materials contracts, suggesting fewer scope changes and change orders over the course of construction.

No significant correlation emerged between procurement method, contract type and safety performance, with one exception: time-and-materials projects recorded an exceptionally low TRIR of 0.04.

Time-and-materials contracting was most common in industrial, infrastructure and renewable energy markets.

CONSTRUCTION TECHNOLOGY

Technology adoption continues to expand across the construction industry.

• The four most commonly used technologies during the past three years remained consistent:
• Project-management platforms
• Safety workflow technologies
• Drones
• Jobsite security technologies

TECHNOLOGY MOVES TO THE CENTER

Just three years ago, artificial intelligence was virtually absent from EIC projects. Today, 18% of projects report using AI technologies.

Importantly, no major technology category has declined in usage over the past three years, suggesting contractors continue to realize measurable return on investment.

Technology deployment also spanned all contract types and project sizes.

Construction technologies were utilized across projects of every size category. Data indicates that technology deployment frequency remains consistent regardless of project dollar value.

“During the past three years, we have experienced unprecedented growth which we attribute to two key factors,” says Rob Griffith, chief operating officer of Gaylor Electric. “First, we are collaborating with our customers earlier in the precon process. The second—related—factor is our commitment to utilizing innovations that increase efficiency and safety for our workforce and the speed at which we deliver reliable outcomes on projects.”

Projects utilizing safety technologies consistently reported lower TRIR rates than projects without those technologies.

The trend suggests that investments in safety-focused technology are contributing to improved jobsite performance.

“Technologies like BIM, VDC, field-management platforms and real-time reporting help teams communicate more effectively and make informed decisions faster,” Terry says. “Our longstanding investments in these tools give our teams a distinct advantage when delivering high-quality results. This amounts to better productivity, safer jobsites and more predictable outcomes for owners.”

WHAT THE INDUSTRY CAN LEARN

Companies qualifying for EIC awards should take pride in their performance. The data confirms that ABC’s EIC-awarded projects significantly outperform industry averages across safety, budget and schedule metrics.

• The analysis also reinforces several broader conclusions:
• Preconstruction services deliver measurable value
• Technology adoption is accelerating and becoming a key differentiator
• Safety leadership remains foundational to project excellence
• High-performing contractors consistently deliver quality projects regardless of procurement method or contract structure

The data also provides insights worth sharing broadly across the industry. Regardless of project size, market sector or delivery method, the conditions for excellence can be created through intentional planning, collaboration, innovation and leadership.

SEE ALSO: ABC UNVEILS AWARD-WINNING CONSTRUCTION PROJECTS, NATIONAL CONTRACTOR OF THE YEAR, SAFETY AND DIVERSITY EXCELLENCE IN THE INDUSTRY

The post Inside Construction’s Highest-Performing Projects first appeared on Construction Executive.

Key findings from the report include:

• Modest spending growth: Total U.S. construction put in place is forecast to increase about 1% in 2026 to roughly $2.2 trillion after a slight decline in 2025.

• Sector divergence: Public infrastructure and government-funded projects are expected to remain relatively strong, helping offset weaker activity in several private building segments.

• Soft private markets: Sectors such as multifamily housing, lodging and traditional office construction continue to face headwinds from high financing costs and economic uncertainty.

• Megaproject drivers: Data centers, infrastructure and certain advanced manufacturing projects are expected to remain key growth engines for the industry.

FMI notes that contractors are increasingly forced to make “sharper choices about where to compete and how much risk to take on” as growth becomes more selective across construction markets.

SOURCE: “2026 Engineering & Construction Outlook” FMI // fmicorp.com/insights/construction-outlook

The post Selective Growth: FMI’s 2026 North American Engineering & Construction Outlook first appeared on Construction Executive.

In late summer 2021, Clay Adkisson, founder of Nashville-based urban design firm Openworks, was driving down the interstate in Nashville when something caught his attention. To the naked eye, it looked like a run-down, dilapidated Super 8 motel from the 1970s. To Adkisson, it looked like the future of multifamily construction.

“Just picture, ‘blighted, old motel,’” says Allen Buchanan, a principal at Dowdle Construction, the general contractor and construction partner on the project, “because that’s what it was.”

But together, Adkisson and his business partner Austen Helfrich—co-founders of Wilder Ventures—pictured it easily: The Wilder–an affordable, sustainable, compact-yet-functional, 97-studio multifamily apartment complex, developed from that blighted, old Super 8.

“Clay and Austen’s vision was, ‘We’re going to capture all the people that may be down on their luck and need a hand up, not a hand out,” says Buchanan. Thanks to help from an $11-million loan from local Nashville bank Truxton Trust and Boston-based BlueHub Loan Fund, 40% of the units are deed-restricted to individuals earning at or below 75% of the area median income, equivalent to earning about $29/hour or less this year in Nashville.

While the Nashville neighborhood where the motel was located is less than affluent, Nashville is overall one of the most expensive major cities in the nation. Average home prices have risen from $250,000 in 2015 up to more than $475,000 as of 2025. The average studio apartment is pushing $2,000/month near the downtown core. As a hub for travel nurses, military and other career first-responders, short-term living is often less than probable in the heart of downtown.

Adkisson and Helfrich are no strangers to community-focused real estate development. “Our businesses are aligned together under one goal: Create high-quality attainable housing for the cities we know and love in the Southeastern U.S.” Not only is their home city of Nashville a chart-topper for price, but it continually tops national charts as one of the hottest development markets in the country–adding approximately one hundred new residents daily for the past several years. “As forward-thinking housing developers,” says Helfrich, “our mission was clear: In a city flooded by new luxury product, can we create some more attainable housing stock–at prices average Nashvillians can afford–in those same desirable neighborhoods in and around the downtown core?”

Wilder Ventures purchased the existing Super 8 building in 2022 and immediately began a six-month construction selection process, eventually landing on Dowdle Construction Group as construction partner “based on their ‘seen it all’ experience with adaptive-reuse buildings,” says Adkisson, “and the professional experience of their project team.”

If Dowdle thought they’d seen it all, then Buchanan was proven wrong with The Wilder. “I don’t know many people that have followed this design-build model in Nashville, if there are any,” he says. The project kicked off with a 13-month timeline and $6.6-million construction budget.

PLEASE, HOLD ON TO THE HANDRAILS

Considering the build would be not only adaptive, but also sustainable, the teams at Wilder Ventures and Dowdle aimed to preserve as much of the original structure as possible and repurpose materials wherever they could–from even the smallest details such as handrails. “Believe it or not,” Buchanan jests, “handrail design 50 years ago is not the same as handrail design now. So coming up with a retrofit design that brought the handrails up to code on a four-story building where the handrails go around every level and there are a ton of stairs, was a lot of back and forth between a steel designer and Clay, and becoming cost efficient with that was a six-figure problem that we all faced together.”

To fully repurpose the existing 95-room motel building, Dowdle would need to perform a full-gut, down-to-the-studs renovation to convert it into 97 300-square-foot studio apartments. This included complete site and building restorations, such as installing new sustainable stormwater, grounds and building features; completely new and modernized utilities and fire protection systems; high-quality finishes; and new resident amenities, like a vinyl listening lounge, coworking area, laundry facility, fitness center, swimming pool and large half-acre dog park.

To secure smooth execution throughout construction, Adkisson led the charge on clear design communication from the start, managing the minutiae of everything from cutting open drywall to inspecting plumbing to moving duct work to repairing elevators and more.

“We had to fix everything up,” says Buchanan. “Someone had let the property fall into the condition it was in, and all those things were swept under the rug. We now were responsible for bringing them up. So, the initial budgeting with Clay and Austen was also like a discovery.”

BUDGET BEWARE

Budgets are tight on any construction project, but for a first-of-its-kind, sustainable, affordable adaptive reuse in the heart of Nashville, Tennessee, the financial constraints were even more pronounced. “I think Clay and Austen were really at the forefront of this genre,” says Buchanan, “so staying on budget was critical. We simply couldn’t afford surprises during construction.”

From the outset, Adkisson, Helfrich and Buchanan developed the budget collaboratively, ensuring everyone was aligned before work began to break down and rebuild walls. The team also maintained close coordination with the city throughout the process to prevent unexpected permitting issues from derailing the project. Considering the Super 8 was constructed in the 1970s, pretty much nothing was up to code, but that meant everything was up for innovation.

In the instance of the energy code, Buchanan says: “The old glass windows are definitely not meeting the standards for new glass windows. The amount of insulation in a wall assembly has to be to a certain standard. In this old building, there’s no good way to fix that other than tear the walls out and start over.”

On their timeline and budget, that just wasn’t practical. Adkisson, Helfrich and Buchanan worked closely with the city on some of the more challenging items that appeared during the discovery process, one of which was the game of Tetris that was turning a hotel room into a studio apartment with a bedroom, bathroom and kitchenette, all while maintaining ADA clearances.

“Fitting all of those pieces in was a huge lift for this project,” says Buchanan, “but Clay and Austen felt very strongly that to offer anything less wouldn’t be worth it.”

Thanks to a painstaking preplanning and permitting process, it was essentially normal construction all the way up to the ribbon cutting. “By early March 2024,” says Adkisson, “we were able to welcome our first residents to The Wilder.”

MOVING DAY

Today, The Wilder is at capacity and is changing the vibes of the surrounding area. Buchanan notes that the neighborhood has “calmed down” compared to what it felt like three years ago. “There is so much need for this type of change in these little pockets of the city. Word gets out and people now know that it’s a safe place to live–so I’ve certainly seen it positively impact the community in a huge way.”

According to Adkisson and Helfrich, residents consistently say they appreciate the flexible layouts, thoughtful millwork with plenty of storage and ample daylight each unit lets in. “We are grateful the execution of the project matched the vision,” Helfrich says, “and the building serves those we and our community partners hoped it would: teachers, nurses, music industry workers, hospitality workers and students.”

Now, two years into full operations, The Wilder is gaining international recognition for its inventive approach and community and environmental impact, earning the Jack Kemp Excellence in Affordable and Workforce Housing award from the Urban Land Institute.

“We were encouraged by our local city council members and Nashville-area colleagues to apply for the Jack Kemp Award,” says Adkisson. “Candidly, we didn’t think we had any chance to win such a prestigious award based on the large pool of applicants and notable projects that apply from all over the country each year. Fortunately, ULI, the Award Jury and our peers all believed we had done something remarkable–and replicable–here: developing a path to create high-quality, attainable housing in and near major urban centers, for a fraction of the cost and timeline to delivery. We are grateful for their decision.”

SEE ALSO: PLAN OF STEEL: RALEIGH’S NEWEST ADAPTIVE-REUSE PROJECT

The post Motel Tetris: Turning a Nashville Super 8 Into Award-Winning Affordable Apartments first appeared on Construction Executive.

Often described as “America’s industrial thrift store,” repurposedMATERIALS works with contractors, manufacturers, utilities, government agencies and agricultural operations to divert usable materials away from landfills and into new, productive applications. Rather than breaking materials down through recycling, the company specializes in repurposing—keeping items intact and functional so they can be reused with minimal processing.

“For us, the goal isn’t perfection—it’s practicality,” says company owner Damon Carson. “If something is still strong, still safe and still useful, then throwing it away doesn’t make sense. We exist to connect that material with someone who can actually use it.”

SEE ALSO: ADAPTIVE REUSE PROJECTS ABOUNDED IN 2025

A Practical Approach to Construction Waste

Construction waste is often a byproduct of timing, specification changes or liability constraints—not material failure. repurposedMATERIALS focuses on capturing that overlooked value. With warehouse locations across the United States, the company accepts everything from surplus building materials and industrial components to highly specialized items that no longer fit their original purpose.

This approach allows builders and project managers to solve two problems at once: reducing disposal costs while gaining access to affordable materials. In many cases, materials available through repurposedMATERIALS can cost a fraction of new inventory, while still meeting the functional needs of the project.

The company’s impact becomes especially clear when looking at real-world case studies that demonstrate how creative reuse can solve unexpected challenges.

Case Study #1: Bulletproof Glass Finds a New Home in a Zoo

One of repurposedMATERIALS’ most striking examples involves a semi-truckload of unused level-8 ballistic glass panels. Originally manufactured for installation at the state capital complex in Sacramento, California, the two-inch-thick panels—measuring 42 inches by 10 feet—were rejected after being produced to the wrong specification.

For many suppliers, this kind of mistake would result in scrapping the glass entirely. Instead, repurposedMATERIALS accepted the material, recognizing that its strength and quality were still exceptional.

The glass would find its home in an unexpected place. A zoo in Texas, preparing for construction of a new lion exhibit scheduled to begin in 2026, needed large, durable viewing panels capable of safely separating animals from visitors. repurposedMATERIALS re-homed 24 of the ballistic glass panels to the zoo.

Although the glass was technically over-engineered for the application, the zoo gained a far more affordable solution than purchasing new specialty panels—and the material avoided the landfill entirely.

“That glass didn’t fail,” Carson explains. “It just didn’t fit one project. But for the zoo, it was a perfect match. That’s what repurposing is all about—finding the right second life.”

Case Study #2: “Expired” Natural Gas Pipe Solves an Agricultural Challenge

In another example, a major natural gas utility company in Illinois faced a familiar regulatory issue. Polyethylene natural gas pipe must be installed and buried within three years of its manufacture date to meet safety and liability requirements. Once that window closes, the pipe becomes unusable for gas service—even if it is brand new and structurally sound.

Rather than discarding the material, the utility sent the “expired” pipe to repurposedMATERIALS. The company then matched it with a Minnesota hog farmer facing a different problem altogether.

The farmer needed a cost-effective way to transport manure from his hog barns to his cornfield irrigation system, where it would be sprayed as fertilizer. He buried 2,800 feet of the expired four-inch polyethylene pipe to move the manure efficiently across his property.

For the farmer, the manufacturing date was irrelevant. He needed pipe that was strong, reliable and affordable—and the reclaimed gas pipe met those needs perfectly.

“Regulations can turn perfectly good materials into waste overnight,” Carson says. “But outside of that original use case, those materials can still be incredibly valuable. In this case, one problem became another person’s solution.”

Case Study #3: Retired Military Parachutes Become a Monastery Workshop

Not all repurposing solutions come from construction or utilities. Sometimes they come from the Department of Defense.

The U.S. military routinely retires massive cargo parachutes used to deliver tanks, Jeeps, ammunition and food supplies to battlefields. These are not standard parachutes—they range from 35 to 100 feet in diameter and are built to withstand extreme forces. Once retired, they are typically destroyed or discarded.

repurposedMATERIALS stepped in to redirect these parachutes toward a completely different mission.

When Brother Joseph and the Carmelite monks in Wyoming needed a warm, workable space to help build their monastery, they chose creativity over conventional construction. Using eight repurposed military parachutes sewn together and reinforced with one-inch blended webbing tied to concrete-filled drums, the monks engineered a temporary workshop enclosure.

Once a portable propane heater was turned on, the parachutes expanded like a hot air balloon, creating a surprisingly effective and insulated workspace. Within three hours, the structure transformed brutal Wyoming winter conditions into a usable environment where the monks could continue their work.

“That project is a perfect example of thinking differently,” Carson says. “Those parachutes were designed to save lives in combat. Now they’re supporting a peaceful, productive purpose. That’s the beauty of reuse.”

Smart Solutions for a Changing Industry

Builders face increasing pressure to reduce waste, lower embodied carbon and control costs. By reusing materials as-is, contractors avoid the environmental impact of manufacturing new products while also cutting transportation and disposal costs. The result is a more efficient material lifecycle—one that aligns sustainability with common-sense economics.

“Construction doesn’t need more buzzwords,” Carson says. “It needs options that work in the real world. Repurposing gives people a smarter way forward without sacrificing quality or performance.”

SEE ALSO: WHAT’S OLD IS NEW: ADAPTIVE REUSE ACROSS AMERICA

The post Old Military Parachutes Repurposed in Wyoming Monastery Project first appeared on Construction Executive.

Driven by an increase in hybrid work, an ongoing housing shortage and a heightened focus on environmental concerns, these unique projects not only help revitalize communities but support sustainability, reduce waste and help contractors grow their business. 

REUSE PROJECTS AND RESEARCH

High-profile adaptive reuse projects include the award winning Asher Adams Hotel, formerly the historic Union Pacific Railroad Depot in Salt Lake City; The High Line, originally an elevated railroad track turned public park in New York City; and Ghiradelli Square, the iconic San Francisco-based chocolate factory turned shopping, dining and entertainment complex. These transformations showcase the power of adaptive reuse to revitalize local neighborhoods and communities while reducing the environmental impact and restoring the architectural heritage of abandoned structures.

Given the nuances associated with adaptive reuse projects, contractors gain an unprecedented opportunity to grow their business, learn new technical skills, navigate complex project management issues and hone problem-solving proficiencies, while expanding the opportunity to apply creativity and innovation to project design. Offering laborers the hands-on opportunity to work on adaptive reuse projects gives contractors a competitive edge and can help attract highly motivated and energetic individuals to increase their talent bench and showcase expertise in tackling these unique projects. 

Furthermore, the measurable gains achieved through these projects are proven and significant. Industry research cites adaptive reuse projects can be completed up to 30% faster and are typically 15–30% less expensive than new construction due to savings on demolition, new materials and labor. By executing these revitalization-type projects, contractors also demonstrate a commitment to sustainability, helping to attract like-minded industry partners and much-needed talent resources, all while contributing to the greater good. The Carbon Avoided: Retrofit Estimator tool was purpose-built to quantify carbon savings and, in a 2024 study on reusing a historic building, found an 82% reduction in global warming potential compared to building new. The environmental impact of adaptive reuse is significant and can make a meaningful difference in local communities around the world. 

CHALLENGES AHEAD

While the benefits are clear, adaptive reuse isn’t without its challenges. Unlike new builds, adaptive reuse projects can present unforeseen hurdles like structural issues, building codes that are difficult to meet, contaminants like asbestos, complicated design modifications to existing layouts and more.

To help contractors navigate adaptive reuse projects, there are innovative tools available designed to help overcome these challenges, ensure efficiencies and maximize onsite labor. A few of these solutions include:

• Innovative Cable Solutions: One of the key advantages of adaptive reuse projects is that much of the existing infrastructure–such as doorways–is already present. This means that contractors don’t have to spend time building these out. However, it does mean that contractors need to find efficient ways to move cable through the existing structure efficiently. Most cable reels won’t fit through standard doorways, so contractors tend to waste time tearing down and then rebuilding the frames. Fortunately, there are cable solutions that can fit through most standard doorways, which saves time on these kinds of projects.

• Lighting Carts: Every broken light bulb or fixture takes money out of a contractor’s pocket. Lighting carts allow workers to easily and securely transport these materials across the jobsite. Additionally, these carts save time by eliminating the need for electricians to manually carry fixtures around the site.

• Mobile Storage Solutions: With space often at a premium, these job trailers provide a single, secure place to store all the necessary materials, which helps save on labor and streamline inventory management.

• Kitting and Prefabrication: One of the main advantages of adaptive reuse projects is they generally have a faster turnaround time than new builds. Kitting and prefabricated solutions can help speed up installation time even further by delivering components to the jobsite ready to install. Labor-intensive tasks, such as sorting and basic assembly, are performed off site, meaning specialized labor can spend more time on critical tasks.

As metro areas get more creative in how they utilize their existing buildings and spaces, the number of adaptive reuse projects will only continue to grow. For contractors, the measurable benefits cannot be ignored and while challenges exist, those that overlook the opportunity to tackle these projects are leaving money on the table and effectively handing business to their competitors. By relying on innovative tools, strategic partners and doubling down on a commitment to helping improve their local communities, contractors are well positioned to confidently add adaptive reuse to their project portfolio.    

SEE ALSO: PLAN OF STEEL: RALEIGH’S NEWEST ADAPTIVE-REUSE PROJECT

The post Adaptive Reuse Projects Abounded in 2025 first appeared on Construction Executive.

REGULATIONS AND GREEN PREMIUMS

LEED certification isn’t mandatory, so why should construction industry leaders and contractors invest in the greener building techniques that meet LEED standards?

Municipalities and states across the U.S. are enacting more stringent building performance standards, many of which include carbon caps and broadly align with LEED. This is especially the case in the country’s premium real estate markets—cities like New York, Boston and Seattle (for example, Local Law 97 in New York City mandates carbon caps for buildings over 25,000 square feet). Developers must now factor in carbon emissions not just during construction, but over the lifecycle of the building.

But it’s not just regulation. There’s a growing market-based green premium for sustainable buildings, especially those that can demonstrate low operational costs and carbon footprints. According to research by real estate company JLL, premiums for LEED certified buildings in terms of rental cost, once factors like location and building age are accounted for, average just over 7% globally and 11.6% across eight cities in North America (for reference, there are 1,437 LEED projects equaling over 414 million gross square feet in the top ten U.S. states for such projects). This means buildings that are LEED certified have higher value in the real estate market and typically accrue more financially to owners—a major selling point for LEED-compliant construction practices.

As construction executives look to better incorporate sustainable practices holistically into buildings for both regulatory and financial reasons, there is a key area they cannot ignore. LEED v5 includes heating and cooling within its decarbonization standards due to heating, ventilation and air conditioning systems being among the largest energy consumers in a building, often accounting for more than 40% of total energy use.

Integrating geothermal heating and cooling systems from the outset of design can play a key role in new builds and retrofits across a wide range of buildings, whether they’re part of LEED certification or not.

THE ROLE OF HEATING AND COOLING

The U.S. Department of Energy estimates that about 30% of energy in U.S. commercial buildings is wasted. This represents not just excess carbon emissions but money going literally out the window.  They also represent a major source of carbon emissions, particularly in older buildings reliant on fossil fuel-based heating.

Increasingly, developers and building owners and managers looking to solve these problems are turning to heat pumps. These address some of the energy efficiency issues of HVAC systems; it’s estimated that air-source heat pumps perform on average two or three times as efficiently as fossil fuel-based systems. But while air-source heat pumps tend to predominate currently in North America, another type of heat pump that is more commonly used in Europe can actually boost energy efficiency four to six fold: the ground-source—or geothermal—heat pump.

THE GEOTHERMAL ADVANTAGE

Geothermal heat pumps and HVAC systems transfer heat between a building and the relatively stable temperature of the earth, using the ground as a heat sink in summer and a heat source in winter. This drastically reduces the amount of energy needed to maintain comfortable indoor temperatures, as there’s no drop in output based on outside temperature levels (as there often is with air-source heat pumps).

Advanced technology also enables the drilling of boreholes in remarkably compact spaces. For dense urban developments or university campuses where land is limited, geothermal offers a powerful, compact solution to meeting carbon reduction goals. These systems are also highly compatible with retrofits as well as new construction projects, an important factor in many older cities. All this is why LEED v5 includes geothermal heat pumps as a way to gain points toward certification.

While geothermal HVAC systems often involve higher upfront installation costs (which is why they tend to be less common than air-source systems), they pay off over time through lower energy bills, greater reliability and better efficiency in colder climates, due to their tapping into the earth’s stable temperature rather than relying on unstable and unreliable energy sources. When integrated early in the design process—particularly in new construction—those installation costs can be minimized, making the investment even more attractive. And, depending on location, government incentives like tax credits and utility rebates can help offset the initial capital outlay.

HOW GEO-EXCHANGE NETWORKS BOOST EFFICIENCY AND CUT ENERGY USE

As construction leaders and decision-makers contemplate the future, they can and should think beyond individual buildings. In any relatively dense area, there will be buildings whose occupancy varies by hour of the day—commercial buildings full during the day and empty at night, while residential buildings are the opposite. This opens opportunities for buildings with geothermal HVAC systems to share—or even sell—their excess energy  at different periods of the day when demand fluctuates, helping to balance overall energy demand and reduce the need for fossil fuel energy generation overall. As municipalities and institutions look to decarbonize, these geo-exchange networks offer a pathway to broad-scale emissions reductions.

PARTNERSHIPS FOR BUILDING DECARBONIZATION

As green construction moves from luxury to necessity, the sustainability of HVAC systems will become less a challenge and more an opportunity. But this cannot take place in a silo; to fully take advantage of technologies that enable geothermal heating and cooling and ultimately geo-exchange networks, construction executives need to seek out key partners in the energy, technology and utility spaces to fully mobilize the expertise that’s available to drive sustainability across projects. The firms that build these partnerships now will lead the market tomorrow.

In a rapidly evolving construction landscape, geothermal heating and cooling technologies stand out not only for their environmental performance, but also for their economic and operational advantages. As LEED v5 raises the bar for decarbonization and sustainability, early integration of geothermal HVAC systems can be a crucial differentiator, helping developers meet ambitious standards, avoid regulatory risks and deliver long-term value for owners and occupants alike.

SEE ALSO: ENERGY STAR VS. LEED: WHICH CERTIFICATION IS BEST FOR YOUR CONSTRUCTION PROJECT?

The post Going Underground May Save Contractors Time, Money and Energy: The Upside of Geothermal Heating and Cooling in Construction first appeared on Construction Executive.

Wyatt Roberts, head of new construction for Dandelion Energy, sat down with Construction Executive to discuss details on how the Energy Star building certification promotes the biggest bang for your buck when it comes to building more and building more sustainably.

How is Energy Star different from LEED or other energy-related building certifications?

Energy Star focuses strictly on energy efficiency, certifying buildings based on actual energy performance data to ensure they meet high-efficiency standards. In contrast, LEED takes a broader sustainability approach, evaluating energy use, water efficiency, materials, indoor air quality and environmental impact through a point-based system.

Energy Star is the best choice for builders looking to maximize efficiency and lower operating costs. For those pursuing a comprehensive sustainability certification, LEED is preferred.

(Tip: Learn more on Energy Star vs. LEED: Energy Star Certification Guide | LEED Certification)

What does it take to qualify for Energy Star certification?

To qualify, a building must meet the Environmental Protection Agency’s Energy Star efficiency criteria, typically performing in the top 25% of similar buildings nationwide. Certification under the latest Version 3.2 (Rev. 14), revised Jan. 15, 2025, requires:

• Benchmarking energy use through EPA’s Portfolio Manager
• Enhanced thermal envelope requirements to meet or exceed the 2021 International Energy Conservation Code
• Stricter HERS Index Score targets lower energy consumption
• High-efficiency HVAC, insulation, lighting and water heating systems
• Third-party verification by a licensed Energy Star rated party

What should multifamily construction contractors know before aiming for certification?

Contractors should understand that Energy Star-certified multifamily buildings must comply with the Multifamily New Construction program. Key considerations include:

• Upgraded HVAC Requirements: Energy Star 3.2 favors high-efficiency systems like geothermal heat pumps for optimal energy performance.
• Strict Thermal Envelope Performance: Advanced insulation, air sealing and high-performance windows are essential.
• Energy-Efficient Lighting and Appliances: LED lighting, smart thermostats and Energy Star-rated appliances are key to compliance.
• Third-Party Verification: Builders must work with certified Energy Star raters to document compliance.

(Tip: Learn more about Multifamily certification: Energy Star Multifamily Guide)

Do qualifications vary by project specs, state or funding type?

Yes, Energy Star certification requirements can vary based on:

• Project Type: Single-family vs. multifamily certification criteria differ, with MFNC requirements applying to larger residential projects.
• State Energy Codes: Some states have stricter energy efficiency mandates that align or exceed Energy Star 3.2 standards.
• Public vs. Private Funding: Publicly funded projects often come with additional energy efficiency incentives or mandates for Energy Star compliance.

(Tip: Learn more state-specific policies:DOE Building Energy Codes Program.)

How many contractors are aware of Energy Star certification?

Awareness is reasonably high among major developers and energy-conscious builders, particularly in states offering strong efficiency incentives. However, many smaller contractors and developers remain unfamiliar with the process and benefits, presenting an opportunity for further education—especially on how geothermal HVAC can simplify certification.

(Tip: Learn how to become an Energy Star Partner: Energy Star Partner Resources

How does geothermal HVAC help builders achieve Energy Star certification?

Geothermal HVAC systems significantly improve energy efficiency by using stable underground temperatures to reduce heating and cooling loads. This helps builders meet Energy Star 3.2 standards in the following ways:

• Lower HERS Index Scores: Geothermal HVAC cuts energy consumption, helping buildings stay within the required efficiency range.
• Reduced Energy Costs: Energy Star prioritizes long-term operating cost savings, which geothermal systems provide.
• Integration With Other Efficiency Measures: Geothermal pairs well with high-performance insulation, air sealing and energy recovery ventilation to optimize overall building efficiency.

What incentives drive builder interest in geothermal energy?

Several factors are driving increased builder interest in geothermal energy.

Many states and regions offer programs, such as tax credits, rebates or grants, to further encourage geothermal adoption by reducing the upfront costs to builders at the time of construction.

These local incentives, potential utility rebates and falling upfront costs create a feasible and more affordable path for builders and their customers to adopt geothermal heating and cooling.

Additionally, generous federal tax credits, including the Residential Clean Energy Tax Credit, part of the Inflation Reduction Act, offer homebuyers:

• 30% for systems placed in service after Dec. 31, 2021, and before Jan. 1, 2033
• 26% for systems placed in service after Dec. 31, 2032, and before Jan. 1, 2034
• 22% for systems placed in service after Dec. 31, 2033, and before Jan. 1, 2035

What are the logistics of geothermal heating/cooling a multifamily building, whether constructing a new one or retrofitting an existing one?

Geothermal heating and cooling for a multifamily building can be a seamless and efficient process when planned early and integrated into the overall construction schedule. The first step is site qualification to determine the optimal layout for the heat exchanger (the “ground loop”), considering soil conditions, thermal conductivity, water table depth and other in-ground infrastructure the loop must not impact.

Once feasibility is confirmed, the system is designed and engineered as part of the mechanical, electrical and plumbing plans, ensuring smooth integration with other building systems.

Drilling and loop installation should be coordinated early in the project, allowing drilling and horizontal piping tie-ins to be completed with minimal disruption to other site activity. The installation process includes drilling vertical boreholes, installing piping and connecting the loop field to the building’s manifold system.

Planning for drilling spoils and water management ensures a clean and organized site, keeping construction moving efficiently. A central utility space may be designated for the manifold and flow center, distributing the geothermal energy to individual heat pumps.

Inside the building, piping runs are routed through chases, ceilings or mechanical rooms to connect each dwelling unit’s heat pump to the central manifold. Plumbing and electrical requirements, including fluid piping, pumps and electrical connections to each heat pump, are incorporated as part of the MEP scope.

The distribution system follows standard HVAC design and installation practices, whether ductwork for forced air or hydronic piping for radiant heating/cooling.

The ground loop is the key component, providing a renewable heat exchange source, while the interior mechanical systems are familiar to most HVAC contractors and align with conventional heating and cooling installations. With early coordination and thoughtful planning, geothermal heating and cooling enhances building performance, lowers operational costs and delivers long-term energy efficiency with minimal maintenance.

Can geothermal units easily be swapped out with older traditional units?

Existing builders or single-family homes can be retrofitted to accommodate geothermal heating and cooling systems. However, it is more complicated to do in a retrofit than ground-up new construction.

This can be an involved process because geothermal systems require underground pipes to exchange heat with the earth. Installing this loop involves digging or drilling, which can be disruptive and requires specialized equipment.

Moreover, geothermal units can often use existing ductwork, but some modifications might be necessary to optimize airflow for the new system.

The geothermal units are generally comparable in size to traditional units, but the ground loop system requires additional underground space.

How popular is geothermal heating and cooling amongst contractors today?

Geothermal heating and cooling systems are gaining popularity among contractors as awareness of the technology proliferates and financial incentives drive down the upfront costs of installation.

The Department of Energy notes that geothermal heating and cooling units could be installed in seven million homes by 2035, tripling the current U.S. installation base.

Contractors are recognizing the long-term benefits of geothermal heating and cooling as they leverage it as an opportunity to deliver the highest efficiency premium HVAC solution to their customers while building new homes that are less expensive to own. Builders are able to attract a broader base of customers looking to benefit from the value of renewable energy resources installed from the ground up and to establish themselves as leaders in sustainable building practices.

What is the likelihood of contractors building with geothermal energy going forward, considering the exacerbated demand for housing?

With the rising demand for housing and the growing emphasis on energy efficiency and sustainability, geothermal heating and cooling systems are becoming a more attractive option.

New construction is an especially opportune time to install geothermal systems because it eliminates many challenges and added costs associated with retrofitting existing homes while minimizing the building’s environmental footprint and equipping it with the most durable, cost-effective home heating and cooling solution from day one.

There is an urgent need to build more new homes. A growing percentage of these buildings will include geothermal heating and cooling solutions.

What is the permitting process for geothermal building?

Installing a geothermal system typically requires a simple state level drilling permit which is easily attained by a licensed driller. Beyond that, normal municipal construction permits need to be in place as with any other project. Typically these can take a month or more, depending on the locality.

Once permitting is secured, the installation proceeds in three phases.

First, the ground loop, the system’s heat exchange component, is installed. Then, the ground loops are connected to the home’s infrastructure. Finally, the heat pump itself is installed, completing the geothermal system.

What technology is required to set up and operate geothermal heating/cooling units?

Setting up and operating geothermal heating and cooling units involves several key technologies:

• Ground Loop System: This is the heart of the geothermal system, consisting of pipes buried underground to exchange heat with the earth.
• Heat Pump: The indoor unit, which contains the compressor, heat exchanger and controls, transfers heat between the ground and the home.
• Distribution System: This system distributes the heated or cooled air throughout the home’s ductwork.

Has geothermal heating/cooling proven more attractive for building buyers?

Geothermal heating and cooling is becoming increasingly attractive to home and building buyers, driven by its compelling combination of durability, performance, efficiency and long-term cost savings.

Compared to traditional HVAC systems, geothermal systems offer superior temperature control, consistent comfort and reduced maintenance costs.

Growing awareness, available financial incentives and consumer demand make it more attractive for home and building buyers.

Will geothermal ever become mainstream or even mandatory?

Geothermal heating and cooling is already becoming a mainstream home heating and cooling solution for homeowners. Nearly 80% of Americans are stressed out about their energy bills, and consumers are looking for more affordable, sustainable solutions that will last.

Since heating and cooling are often people’s most expensive monthly bills, federal, state and local incentives make installing a geothermal system more affordable (or working with a contractor who will perform this work).

I expect geothermal heating and cooling to become more popular every year. However, I don’t think it will become mandatory. To be sure, some states and cities are mandating that new construction can’t include new natural gas lines, which will push builders and contractors to adopt electric-powered solutions, the most efficient of which is geothermal heating and cooling.

RESOURCES

SEE ALSO: SIMPLE STEPS TO ADVANCE YOUR LEED CERTIFICATION ASPIRATIONS

The post Energy Star vs. LEED: Which Certification Is Best for Your Construction Project? first appeared on Construction Executive.

Since the beginning of this decade, building permits for over 600,000 multifamily units have been issued annually, according to U.S. Census data. But even with that steady output, demand continues to far exceed supply in most major urban centers.

Cities like New York, Los Angeles and San Francisco continue to attract professionals, students, creatives and entrepreneurs, drawn by the promise of economic opportunity, culture and connectivity. Yet, these same cities often price out the very people who make them vibrant. As a result, many are rethinking what urban living should look like and discovering that smaller may actually be better.

COMPACT LIVING WITH AN EXPANSIVE LIFESTYLE

One response to the housing shortage is the rise of micro-housing—compact-living units that typically measure under 415 square feet. While that may sound modest, micro-apartments are often built in amenity-rich environments where shared spaces, like gyms, coworking areas, lounges, rooftops and even communal kitchens enhance the quality of life for residents.

Residents trade square footage for walkability, location and community. And increasingly, cities are embracing this model to make high-demand neighborhoods more accessible to single renters, young professionals and downsizers alike.

Micro-housing isn’t just a short-term fix—it’s also aligned with broader goals for urban sustainability. Smaller homes mean a lighter environmental footprint and lower energy consumption. They also ensure more efficient land use, which is crucial in high-density cities where developable space is scarce and expensive.

In many cities where real estate prices are among the highest in the nation, micro-housing offers a practical way to densify without drastically altering neighborhood character. With thoughtful zoning and design, these units can integrate seamlessly into the existing urban fabric.

MICRO-HOUSING IS MOST POPULAR IN THE WEST

According to a recent story from storage space marketplace StorageCafe, micro-housing is most prevalent in cities with long-standing affordability issues and high population density. Seven out of the top 10 cities with the highest share of micro-housing units are in the West.

San Francisco leads the way, with a substantial 15% of its total rental stock consisting of very small apartments. This is no surprise in a city where housing costs are among the most unaffordable in the country and the tech-driven economy continues to push housing prices up. The city’s interest in compact living is only increasing, with a very consistent 30% of the new rental stock under current construction in San Francisco falling under the same category.

And it’s not just the city of San Francisco that is delving into micro-housing to solve the affordability issue, but the rest of the Bay Area as well. For example, in Berkeley, development company Panoramic Interests is in the process of building CITYSPACE Studios, a project offering compact, 160-square-foot living spaces where residents enjoy shared amenities that foster a sense of community: kitchens, social lounges and private courtyards.

Seattle comes next in terms of local share of micro-housing in its local inventory, with 8.7% of the apartments and homes here qualifying as such. Driven by both housing need and local innovation, the city has embraced compact living as part of its broader approach to urban planning.

Portland follows the same trend, with a 6.7% share, reflecting the Pacific Northwest’s openness to urban experimentation and density.

However, micro-housing isn’t limited to the West. In the Midwest, Minneapolis has taken a progressive stance on zoning reform and housing access. Here, over 10% of rentals are micro-units, a number that reflects both policy support and resident demand for affordable, efficient spaces close to jobs and transit.

Chicago also ranks high, with micro-units making up 7.4% of its rental stock, largely concentrated in trendy, transit-accessible neighborhoods.

On the East Coast, Philadelphia leads the way, with close to 7% of the housing units in the city qualifying as compact living.

New York City, where space has always been at a premium, reports a 6.5% micro-housing share. In sought-after boroughs like Manhattan and Brooklyn, micro-units are helping to ease the strain on housing. Nearby Newark shows similar patterns, with micro-units serving as accessible options for people who love living in the midst of the city but without spending a huge chunk of their paychecks on housing.

MICRO-LIVING IS HERE TO STAY. CONSTRUCTION NUMBERS PROVE IT.

Micro-housing isn’t just part of the existing housing inventory but also an increasingly common component of new developments. In Seattle, a remarkable 66% of the new apartments under construction are micro-units. That’s followed by 56% in Boston, 50% in Newark and 43% in New York City.

These numbers reflect a change in the priorities of both developers and renters. In many cities, particularly those with high land costs, building smaller units is one of the few viable ways to increase housing supply in highly desirable areas quickly and affordably. And for renters, micro-apartments offer a strategic tradeoff: less personal space in exchange for a premium location and amenities-heavy lifestyle.

SELF-STORAGE SUPPORTS THE MICRO-LIVING TREND

Living small doesn’t mean giving up all your belongings. Self-storage serves as a natural extension of the micro lifestyle. Renters may keep seasonal items, sports gear, family heirlooms or business inventory in storage units while keeping their living space streamlined and uncluttered. In cities where micro-housing is expanding, we often see self-storage development closely following, filling a vital lifestyle gap.

Rather than treating self storage as a short-term fix during moves or renovations, micro-housing residents are incorporating storage units into their long-term lifestyle. A small, efficient apartment paired with a nearby storage unit can often meet a resident’s full spatial needs at a fraction of the cost of a larger apartment. Renting a self storage unit in Seattle, for example, a city that’s showing strong interest in compact living, costs around $179 per month, which is a very cost-effective way to supplement a small home without needing to upsize.

Compact living is emerging as a forward-thinking response to some of the biggest challenges facing U.S. cities. As urban populations grow and housing affordability becomes more urgent, micro-housing offers a real, concrete solution. These small-footprint apartments can unlock access to high-opportunity, desirable neighborhoods, reduce environmental impact and create close-knit communities.

SEE ALSO: PLAN OF STEEL: RALEIGH’S NEWEST ADAPTIVE-REUSE PROJECT

The post Compact Living: The New Frontier in Urban Development first appeared on Construction Executive.

In 2024, total construction starts have risen 8% to $1.2 trillion: Nonbuilding starts have increased 11%, while residential starts jumped 8%, and nonresidential building climbed 6%. The lower rate environment in the new year will allow some of those projects in planning to move forward to starts, with total construction rising 9% in 2025 to $1.3 trillion. Residential starts will accelerate, rising 12%; growth in nonbuilding starts will ease back to 9%; and nonresidential building starts will remain steady at 6% growth— albeit with a very different mix in contributions by sector relative to 2024.

This forecast, though, is not without risk. Geopolitical concerns remain worrisome. Should tensions in the Middle East escalate further or engulf more combatants, a potential run-up in oil prices could have significant negative impacts on the U.S. economy.

SECTOR BY SECTOR

Single-family starts were a solid performer in 2024, rising 15% in unit terms. This growth was especially robust in zip codes that are outside of major metro areas as hybrid and remote-work options continue to give workers flexibility in finding more affordable housing. That momentum, though, will not be repeatable in 2025 as starts slow to 5% growth. Restrictive zoning laws, labor restraints and materials prices will skew the market towards the higher end and crowd out younger and less affluent potential buyers. The massive shortfall in housing, though, has created an opening for multifamily housing. Planning reports have been steadily increasing since November, portending a trough in starts in early 2025. After falling 10% in 2024, multifamily units will rebound and increase 11% in 2025.

Commercial construction starts rose 5% in 2024, but the pattern of growth was mixed. Retail starts were solid in response to stronger single-family construction; the beginning of an upgrade cycle pushed hotel starts higher; and data center construction was exceptionally robust. On the flip side, warehouse construction fell and traditional office starts were very weak. The script will somewhat change in 2025, allowing commercial starts to accelerate to 7% growth. Retail, hotel and data centers will continue to drive activity, but warehouse starts will be essentially flat as Amazon restarts their building plans and has added new construction projects to the planning cycle. Traditional office starts will continue to fall.

Manufacturing starts fell 19% in 2024 but remain well above historical norms. Reshoring activity remains solid, but a larger number of EV and EV battery plants have either been delayed or canceled outright leading to a pullback in starts. Several semiconductor and petrochemical starts are slated for the new year, which will push manufacturing starts up 9%.

Institutional building starts grew 16% in 2024, pushed ahead by several large projects in the healthcare, transportation and recreation categories. Starts will settle back in 2025, growing at a more sustainable pace of 4%. Healthcare starts will continue to be a main contributor as hospital construction overtakes clinic and nursing home activity. Education starts will also climb due mainly to K-12 starts as new residential developments get built.

Nonbuilding starts strode further ahead in 2024, increasing 11%: Public-works starts rose 16%, while electric power activity fell 2%. Infrastructure funds continue to flow into the market, but the trajectory of that growth faces a key test over the coming quarters. Congress is currently operating under a continuing resolution through December 20th, which maintains funding at FY2024 levels. Assuming Congress passes the needed appropriation bills in December, which seem like a Herculean task given the current situation in Washington, it’s likely that public works starts will be essentially flat over the next three to six months before starting to show signs of growth.

Even as that acceleration happens in the later portion of 2025, IIJA funds will likely be less impactful over time as much of the money has already been filtered down to state and local areas. Public-works starts will slow in 2025, rising 11%. On the utility front, a stable outlook for utility-scale wind and solar as well as grid hardening will push starts 1% higher in the new year. In total, nonbuilding starts will increase 9%.

The post Setting the Stage for Growth first appeared on Construction Executive.

General office construction is down 27% since the start of the pandemic and has now fallen to levels not seen since the beginning of 2018. Of course, that’s in nominal terms. Accounting for inflation, construction spending on office buildings has fallen to the lowest level since the first quarter of 2015.

TAKING UP RESIDENCE

The multifamily residential segment faces a similar, albeit less severe and structural, issue. The past few years have seen a historic boom in apartment construction, as the combination of low borrowing costs in 2020 and 2021 and widespread housing shortages induced significant investment. As a result, there were more multifamily housing units completed in August 2024 than in any month since April 1974, over half a century ago.

This massive increase in unit supply has resulted in falling rents in certain high-demand areas. That, in conjunction with the highest interest rates in 15 years, has led to a sharp decline in authorizations for new multifamily units. Permitting for multifamily units has fallen more than 40% since hitting a nearly four-decade high in early 2023.

This has already resulted in a sharp decline in multifamily construction activity, with spending in the segment down 10% since hitting an all-time high in mid-2023. Given that the number of multifamily units under construction continues to plummet, multifamily investment will continue to slow in the coming quarters.

ON THE REBOUND

While the current malaise in both of these segments is worth losing sleep over, I think multifamily construction will rebound more quickly than office construction. For apartment projects, many of the problems are cyclical. Interest rates are elevated, despite the Federal Reserve initiating a 25-basis-point rate cut at its September meeting, and lending standards remain restrictive. While the recent onslaught of supply in certain markets has lowered rents, the nation still faces a severe and structural housing shortage. Over time, that will bolster multifamily construction.

The headwinds facing the office segment are more structural in nature. While the share of employees working either remotely or on a hybrid schedule has increased at a slower rate recently, and may even start to decline if the labor market loosens, it won’t return to pre-pandemic levels. More than one in four workers was either hybrid or remote in 2023, up from one in 10 in 2019. This trend, and the uncertainty surrounding it, will keep office construction volumes suppressed for some time.

FREE WEBINAR: Anirban Basu will present “Construction Executive’s 2024 Construction Economic Update and Forecast” on Dec. 11. Register for this program and watch previous forecast webinars at webinars.constructionexec.com.

The post Office Spending Has Taken a Huge Hit first appeared on Construction Executive.