Q1 Construction Industry Report — West Great Lakes

Construction priorities are shifting due to social, economic, technological, geopolitical and policy forces. Emphasis is moving from sustainable energy to data centers and supporting infrastructure as AI and hyperscale computing rapidly expand. Although overall U.S. construction spending is declining in the near term, data center and civil construction are growing, education remains steady and industrial activity is increasingly focused on modernization. Contractors can find opportunities by adapting strategies to target resilient sectors such as civil, education and healthcare and by using data to anticipate market shifts.

Trends

Offsite Construction

Modular construction is gaining momentum to help counteract labor shortages and meet time and budget constraints.

Risk Management

Contractors are increasingly prioritizing proactive risk management, early material sourcing and tailored insurance coverage, including innovative options like parametric insurance for weather risks.

Technology Adoption

There is a strong focus on AI, robotics and integrated technology like building information modeling (BIM) and digital twins to increase project efficiency and safety.

Challenges

There is a decline in traditional construction sectors like office, retail and lodging. Nationwide, non-residential construction spending is softening across most categories except data centers and infrastructure, with further decrease expected in 2026.

Labor shortages remain the most critical long-term challenge, as the industry must attract hundreds of thousands of new workers nationwide. An aging workforce is worsening the issue, driving higher labor costs and project delays.

Steel and aluminum prices are high, leading to budget unpredictability.

U.S. copper mining expansion is a slow, complex process that often takes 10–20 years because of permitting, environmental and construction constraints.

Growth Areas

Focus on Data Centers, Infrastructure and Utilities

There is a continued strong reliance on road, sewer, water and other infrastructure, energy production and data center construction.

As infrastructure, utilities and tech-led projects drive 2026 construction growth, investors, developers and policymakers are expected to prioritize data centers, broadband/fiber optic, renewable energy infrastructure and critical utilities.

Late-2026 rate cuts may help restart delayed projects.

Modernization Offers Opportunities

Industrial construction is projected to reach $17 billion in 2027, indicating a shift toward efficiency improvements and modernization projects over new facility builds.

Much of the states’ infrastructure is near the end of its useful life – addressing this was a key provision of the Infrastructure Investment and Jobs Act.