“From residential and commercial projects to infrastructure, as well as equipment and tool rentals, Chris Fisher, managing principal, offers his insights on the key construction trends to watch in 2025.”
Chris Fisher is a Managing Principal at a leading consulting and M&A advisory firm, where he oversees the Global Commercial Team and leads the firm’s Building and Construction industry practice. He holds a Bachelor of Science in Industrial Management from Purdue University and an MBA with a focus on global economics from Indiana University. Fisher is actively involved in various construction and industrial industry groups and has served as an expert witness before the Federal Trade Commission. He frequently speaks at analyst days and board meetings.
In early December 2024, ForConstructionPros.com spoke with Fisher about construction trends and what to expect in 2025.
Q: What trends do you foresee in residential and commercial construction?
Fisher: When looking at residential construction, it’s important to consider both single-family and multifamily segments. The U.S. is facing a housing shortage, primarily driven by affordability issues. Builders are often reluctant to build homes priced under $350,000, even though there is significant demand for homes in the $200,000 to $250,000 range. This presents a structural challenge in the industry.
However, there are opportunities, especially in southern states where housing demand is high and construction costs are lower. In these regions, single-family construction is likely to see growth. As interest rates decrease, we expect multifamily construction to pick up again in the latter part of 2025, due to the longer gestation cycle of these projects.
In the commercial sector, there are several areas showing continued growth:
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Data Centers: These facilities require specific designs and power generation capabilities, and the demand for them will continue to rise.
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Reshoring and Manufacturing: As the U.S. focuses on bringing manufacturing back home, there will be growth in manufacturing facilities, both small and large, to support this trend.
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Recreational and Hospitality: The demand for recreational hotels, motels, and other facilities will grow as more people seek experiences. This includes new developments in both rural and urban areas.
Q: With the rise in residential construction, do you anticipate growth in decorative concrete and outdoor living spaces?
Fisher: Absolutely. Following the pandemic, outdoor living became one of the hottest segments in construction, with homeowners investing in hardscapes, landscapes, pavers, and decorative concrete. This trend will continue, especially as more people work from home or seek a balanced lifestyle. As interest rates fall, the existing home sales market will re-engage, and many homeowners will invest in enhancing their outdoor spaces to increase their home’s value. This will lead to a continued demand for outdoor improvements, including paving, pergolas, and landscaping.
Q: Are any trends expected to decline?
Fisher: There are a few risks to watch. Construction is highly localized, so markets with weaker economic indicators, such as low population growth or GDP, may experience a decline despite improvements in national interest rates or GDP. Additionally, if immigration policies impact construction labor availability, we could see delays or reductions in the number of projects starting or completing.
The biggest cycles of demand in construction are often driven by local economic conditions. While we’ve navigated challenges like COVID and high inflation, we’re currently in a more stable phase. However, disruptions, particularly in labor, could create uncertainty.
Q: What advice do you have for contractors in markets with low growth?
Fisher: Contractors should consider expanding into high-demand markets or forming partnerships with local contractors in those areas. It’s crucial to do thorough research on regional markets and build relationships that align with the contractor’s business model and culture.
Q: How do you foresee the next administration’s policies impacting construction labor?
Fisher: The rising demand for construction across all sectors—residential, nonresidential, and infrastructure—will create significant opportunities to attract labor into the trades. The increased emphasis on trade careers, as opposed to traditional university paths, is a positive shift. However, if immigration policies limit labor availability, it could disrupt the industry.
Q: Are you optimistic about the construction outlook for 2025?
Fisher: Yes, I’m very optimistic. We’re seeing material inflation decreasing, interest rates lowering, and an improving lending market. Additionally, the government is working to reduce regulatory burdens on projects, and there’s a strong infrastructure spending tailwind. Consumer confidence is also rising, which is vital for the industry. These factors together create a positive environment for the next few years.
Q: Any final thoughts on trends in construction?
Fisher: Sustainability isn’t as prominently discussed as it was in previous years, even though it remains an important issue. The shift in focus may alter how we approach building practices and construction materials in the long term. Climate change impacts, energy efficiency, and sustainable practices will still play a role, but they may evolve with changing priorities in the industry.
