Cost trends
The Push and Pull of Progress
2025 has seen its share of movement in both directions. While some drivers of activity are gaining pace, others continue to slow. Together, these shifts point to a more dynamic delivery landscape, where strategic flexibility remains essential.
Trending up
AI in Action: Smarter, Faster, Safer
Artificial intelligence (AI) is changing how the construction industry plans, builds, and manages projects, but its impact depends on more than just adoption. AI is no longer new. However, its role in construction has recently been on the rise. In 2024, 30 percent of construction spending went to robots and AI tools. In the first quarter of this year, that number jumped to 55 percent of $3.55 billion.⁶
If this trend continues, AI in construction could grow more than five times by 2032, with the market size reaching $22.68 billion.⁷
AI now helps in every stage of construction. In planning and design, it speeds up data review, improves forecasts, and creates design options faster. In procurement, it cuts waste and finds low-carbon materials to support green initiatives. On job sites, AI monitors equipment and warns of maintenance needs before breakdowns happen. Drones and robots help projects run more efficiently, improve safety, and keep quality high.
Our research shows that 77% of construction leaders view AI as critical to future delivery.⁸ This means the industry sees AI not just as having potential, but as a necessity. The most successful organizations leading the way do more than just use AI. They build strong foundations to get real value from it. This includes investing in leadership, improving data quality, and using flexible delivery models. They also create a culture that welcomes change, supports teamwork, and helps people make quick and smart decisions. AI works best when it is combined with human judgment and experience. This is especially important in industries where solving problems quickly and working together are key.
The future of construction won’t be shaped by tools alone, but by how we use them. Organizations that treat AI as a strategic enabler, not a bolt-on, are better equipped to navigate uncertainty and deliver with confidence. When mindset and machine work together, construction teams can turn disruption into momentum and build smarter, safer, and more resilient projects.
Trending down
Commercial Construction: A Sharp Descent
The U.S. commercial construction sector slowed in the first half of 2025. In May, spending dropped to $119.71 billion — down from $133.47 billion the year before.⁹ That’s a 10.3% fall.
Retail and warehouse planning both saw sharp declines. Warehouse planning fell by 11% in major markets. Retail storefronts dropped 14%. Office and hotel work stayed quiet, with only light activity across the country.¹⁰ These gains weren’t enough to balance the losses elsewhere. Overall, it marked one of the steepest yearly drops since the pandemic.
Two major factors caused the slide. First, the Federal Reserve kept interest rates high into mid-2025. That made borrowing more expensive and delayed new projects. Second, tariffs caused unstable material prices and worsened supply chain delays. This hits warehouse and retail builds the hardest.
Recovery now depends on broader economic shifts and new policy support. Many firms are changing how they build. Local supply chains are helping ease delays. Modular construction is cutting time and costs. And new contracts include tariff escalation clauses to manage price swings. These steps are helping firms stay flexible and limit risk.
This is a critical time for clients to take another look at how they plan projects and buy materials. We suggest talking with contractors early to find flexible ways to deliver work. It’s also important to check contract terms to protect against price changes. When possible, consider using modular designs or local suppliers. These steps can help keep budgets and schedules on track, even in an uncertain environment.
7 AI in Construction Market | Fortune Business Insights
8 AI and organisational agility critical to future delivery of construction projects | Currie & Brown
9 US Commercial Construction Spending | Y Charts
10 US Construction Outlook 2025: Tariffs Recession Risks, and Sectoral Shifts | Steel Industry News