2025 Nonresidential Construction: Spending Down, Data Centers Up

Nonresidential Construction 2025: Spending Falls, Data Centers Fuel Commercial Resilience

The latest U.S. Census Bureau data paints a complex picture for the construction industry heading into 2026. Nonresidential construction spending fell 0.2 % in August to a seasonally adjusted annual rate of $1.24 trillion. Private sector activity declined 0.3 %, while public spending slipped 0.1 %. Ten of sixteen nonresidential categories recorded monthly drops, with commercial and manufacturing construction leading the decline.

This marks the third contraction in four months, leaving nonresidential spending roughly 1.5 % below August 2024 levels. Analysts attribute the slowdown to tight financing, rising materials costs, and delayed federal spending. Yet one segment continues to outperform: data centers and digital infrastructure. These projects are now propping up the wider market and reshaping where the commercial opportunities lie.

For commercial contractors and hiring managers, the trend signals a turning point. Traditional office, retail, and hospitality builds are slowing, but demand for technical construction talent in digital infrastructure remains high. Firms partnering with specialized construction recruiters like The Birmingham Group are better positioned to secure skilled leaders capable of managing these complex builds.

Commercial Slowdown, Data Center Momentum

Manufacturing construction dropped 0.9 % in August and is 8.2 % lower year-to-date. Commercial building spending slid 0.1 %, trailing last year by 7.5 %. “Private and public sector construction owners are clearly being impacted by uncertainty about federal funding, material prices, and labor supply,” said Macrina Wilkins of the Associated General Contractors of America.

Despite these declines, the data center segment continues to expand. Roughly 1 in 7 Associated Builders and Contractors members report active data-center projects, driving backlogs higher than any other segment. Analysts now consider data centers the single strongest category in nonresidential construction.

For TBG clients, this means adjusting hiring strategies. Superintendents, estimators, and project managers with high-voltage, MEP coordination, or modular-build experience are in greater demand than those focused solely on retail or office construction. Contractors able to cross-train commercial staff for infrastructure projects are weathering the downturn more effectively.

What This Means for Commercial Construction Leaders

The current contraction is not universal decline. It’s redistribution. Money is flowing from traditional commercial segments toward industrial, infrastructure, and digital construction. While developers scale back new office builds, tech companies, utilities, and logistics providers are breaking ground on high-density facilities that require advanced coordination and safety management.

This shift affects leadership pipelines. Many GCs are revisiting succession plans and bringing in construction executive recruiters to identify future-ready managers who can adapt to the digital build environment. Contractors that once relied on repeat retail clients are now diversifying into mission-critical work.

Regional Outlook for 2026

Growth pockets remain. Texas, Ohio, and Virginia lead data center construction, while secondary markets such as Nashville and Phoenix attract mid-tier commercial builds due to lower costs and faster permitting. Firms in these regions report strong hiring demand for assistant superintendents, field engineers, and estimators.

In contrast, high-cost metros like New York and Los Angeles continue to struggle with financing and workforce shortages. Those markets may not rebound until interest rates ease or new federal infrastructure funding flows.

Commercial Hiring Insight from The Birmingham Group

For The Birmingham Group’s commercial clients, the message is simple: 2026 will reward adaptability. Hiring managers should:

• Reevaluate compensation using the 2025 Salary Survey to stay competitive.
• Invest in leadership with cross-disciplinary technical experience.
• Prioritize candidates familiar with data-center and infrastructure builds.
• Retain key field talent by offering career progression into emerging sectors.

For candidates, this environment offers rare mobility. Skilled professionals willing to transition from traditional commercial to digital infrastructure projects can command higher pay and long-term security. Submit your resume to explore opportunities.

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