US Construction Outlook: Growth Sectors Face Power, Labor, and Funding Headwinds

DENVER, CO – December 15, 2025 – The U.S. construction industry is gearing up for a year of conflicted signals in 2026, with a new forecast from PCL Construction projecting modest overall commercial growth of 2.6%. While this figure suggests a cautious market, a deeper look reveals a surge of investment in mission-critical sectors—data centers, water infrastructure, and aviation—that are set to become the industry's primary growth engines. However, this boom is on a collision course with formidable obstacles, including power grid limitations, a severe labor crisis, and expiring federal funds.

The 2026 U.S. Construction Outlook, released by the North American construction giant, paints a picture of an industry at a turning point, where success will be defined by more than just traditional building practices. “2026 will require more than traditional approaches,” said Deron Brown, PCL's president and chief operating officer for U.S. Operations. “Contractors who anticipate risk, embrace technology, and collaborate early will be best positioned to deliver certainty in a market that is anything but predictable.”

This forecast aligns with a broader industry consensus of modest growth, with analysts from bodies like the American Institute of Architects (AIA) and Dodge Data & Analytics projecting similar, albeit slightly more optimistic, expansion. The common thread is that while high interest rates and inflation may temper some segments, a handful of specialized sectors will provide a powerful updraft.

The Data Center Dilemma: Powering the AI Boom

Leading the charge is the data center sector, where the artificial intelligence boom is fueling an insatiable demand for new facilities. PCL’s outlook projects a staggering 33% rise in spending in this area, a figure corroborated by other market analyses. FMI, an investment banking and consulting firm, forecasts a 24.9% increase in data center construction for 2026, building on an already explosive 2025.

Yet, this unprecedented growth is running headfirst into a critical bottleneck: power. The nation's electrical grid is struggling to keep pace, with developers facing connection delays of three years or more. This has forced a dramatic shift in strategy, with many data center developers now opting to build their own power plants—from natural gas facilities to microgrids—simply to keep projects on schedule. The scale is immense; some estimates suggest that planned AI-related data centers could require capital investments exceeding a trillion dollars over the next several years, with a significant portion dedicated to securing reliable power.

A Flood of Investment for Water and Skies

Beyond the digital realm, two other core infrastructure areas are poised for significant investment. With nearly 30 million Americans residing in water-stressed regions, cities are accelerating projects focused on potable reuse and advanced water treatment. According to PCL's report, over 600 such initiatives are in development, driving more than $47 billion in investment over the coming decade.

A major catalyst for this spending is new federal regulation targeting PFAS (per- and polyfluoroalkyl substances), commonly known as “forever chemicals.” The Environmental Protection Agency (EPA) has implemented strict limits on PFAS levels in drinking water, compelling municipal water systems across the country to undertake costly but essential upgrades to their treatment facilities and distribution networks. This regulatory push ensures a steady stream of complex civil infrastructure projects for years to come.

Meanwhile, the aviation sector faces a more uncertain future. While airports remain hubs of constant activity and renovation, the expiration of federal funding from the landmark Infrastructure Investment and Jobs Act (IIJA) in 2026 creates a looming financial cliff. Without a new federal stimulus, airport authorities will increasingly rely on traditional funding streams like the FAA’s Airport Improvement Program and Passenger Facility Charges. The funding gap is also expected to accelerate the adoption of public-private partnerships (P3s), a model already in use at major hubs like Denver International Airport (DEN), Los Angeles International Airport (LAX), and Seattle-Tacoma International Airport (SeaTac), to finance large-scale expansions and modernizations.

The Workforce Crisis and Technology’s Ascent

Underpinning all of these challenges is the industry's most persistent crisis: a critical shortage of skilled labor. The report underscores the need for almost half a million new workers in 2026 just to meet demand. This is a problem felt across the board, with recent surveys indicating that over 90% of contractors have difficulty filling open positions, leading to project delays and increased costs.

In response, the industry is turning to technology and innovation not as a luxury, but as a core survival strategy. The PCL outlook emphasizes the essential role of AI-powered tools for predictive scheduling, automated safety checks, and resource management. The market for AI in construction is projected to exceed $4.5 billion by 2026, with technologies like Building Information Modeling (BIM) already demonstrating tangible results; projects using BIM are often completed 20% faster and 15% cheaper.

This technological shift is forcing a parallel evolution in the workforce. The focus is no longer just on recruitment but on upskilling. Contractors investing in digital training for their existing employees are gaining a significant competitive advantage. As the industry integrates drones for surveying, digital twins for project management, and AI for risk analysis, the demand for a tech-fluent workforce will only intensify, reshaping construction jobs for the next generation.