July 30, 2025
12 Insights from Construction Economists 2025 - 26 Outlook
Lighting project strategy starts here: where the smart money sees movement
Twelve construction economists walk into a forecast — and for once, they almost agree. That’s the unusual twist in the latest AIA Consensus Construction Forecast, where outlooks from firms like Moody’s, Dodge, and ConstructConnect point to a shared, if sobering, conclusion: growth in nonresidential construction will be slow, uneven, and shaped by just a few clear bright spots. Consensus points to 1.7 to 2% growth each year in 2025 and 2026.
For the lighting industry, the stakes are real. Office buildings aren’t dead. Data centers are exploding. Warehouses? Not so much. While the topline numbers suggest modest growth, the details tell a different story — of a market split between cautious retreat and hyper-focused investment. Reading between the percentages isn’t just smart, it’s how competitive firms stay ahead.
1. Data Centers: From Server Farms to Growth Engines
There’s no debate here: data centers are booming. Forecasts point to 33.7% growth in 2025, with some models — like Wells Fargo’s — pegging the spike at over 40%. The cause is clear: artificial intelligence, cloud computing, and hyperscale investments are burning up bandwidth — and space. For lighting professionals, that translates to high-spec, power-intensive environments with rapid timelines and consistent capital.
2. Office Construction: The “Zombie Sector” Isn’t Dead Yet
Contrary to the prevailing “office is over” sentiment, the consensus shows a surprising 6.9% growth in office construction for 2025. Some forecasters even call for double-digit gains. This might reflect a pivot toward hybrid-adapted, smaller-footprint workspaces and urban repositioning. While legacy Class B buildings struggle, new builds — often with upgraded lighting and environmental systems — are holding their ground.
Consensus forecast among construction economists Image credit: American Institute of Architects (AIA)
3. Manufacturing: Forecasting Chaos in Steel-Toed Boots
If one sector captures the schizophrenia of this forecast, it’s manufacturing. Predictions range from a catastrophic -17.1% (Dodge) to an optimistic +11.2% (ConstructConnect). That 28-point spread tells us one thing: no one’s quite sure how federal policy, trade tensions, and reshoring initiatives will shake out. For lighting manufacturers, this uncertainty matters. LED high bays and other industrial product forecasts may be in a holding pattern until more clarity emerges.
4. Warehouses Hit the Brakes
Every major forecaster expects warehouse construction to decline in 2025. The consensus? -5.8%. It’s a stark reversal from the pandemic-era warehouse gold rush. Lighting firms supplying high bay and distribution center products may feel the drag — especially as overbuilt markets like Dallas and Inland Empire cool off.
5. Institutional vs. Commercial: Public Money Pulls Ahead
Institutional construction is expected to grow 6.1% in 2025, more than quadruple the commercial sector’s 1.5%. Hospitals, schools, and government buildings are drawing on steady (if politically volatile) public funds, while private developers remain cautious. For lighting, this means the bread and butter may be less retail and more retrofit.
6. Hotels: Checking Into a Recovery
Hotel construction is bouncing back — slowly. From 3% growth in 2025 to 6% in 2026, the sector is showing renewed confidence. Notably, Free Agent Economist projects a 13.6% gain in 2026. As leisure travel stabilizes and business travel adapts, new builds and refresh cycles in hospitality will likely increase demand for architectural and ambient lighting packages.
7. Amusement and Recreation: A Spike Before the Slide
The consensus pegs 2025 amusement/recreation construction growth at 9.9%, before cooling to 1.3% in 2026. While not a core focus for commercial lighting, this blip reflects pent-up pandemic-era demand being released — think arenas, museums, and performance spaces, which often require sophisticated, high-design lighting solutions.
8. The Illusion of "Steady" Growth
Overall nonresidential growth is forecast at a lukewarm 1.7% in 2025, rising to 2.0% in 2026. But behind that placid surface, sectors like data centers and warehouses move in opposite directions, masking significant turbulence. This fragmentation makes targeted strategy — not generalized optimism — essential for lighting companies planning inventory and sales forecasts.
9. S&P Global: The Bear in the Room
While others show modest growth, S&P Global paints a gloomier picture with declines nearly across the board — calling for a -2.4% contraction in nonresidential construction in 2025 and -2.9% in 2026. Their assumptions hinge on tighter monetary policy and macro caution, suggesting that lighting executives should pay attention to bond yields as closely as project bids.
10. Education: The Quiet Climber
School and university construction continues to quietly deliver, with forecasts showing 3–5% growth through 2026. This sector often flies under the radar but remains consistent, driven by aging infrastructure, demographic pressure, and federal funding programs. Education projects also tend to favor long-lasting, energy-efficient lighting — good news for companies positioned on performance and lifecycle cost.
11. Health Care: Clarity Needed
Healthcare forecasts are a puzzle. The consensus growth rate of 4.3% masks a wild variance, from just 0.2% to 8.5%. That range suggests unresolved uncertainty — policy shifts, mergers, and population trends all play roles. For lighting specifiers, this could mean delayed projects or unpredictable shifts in fixture types and energy-code applications.
12. The 2026 Rebound?
If there’s a narrative undercurrent here, it’s this: 2025 is a holding pattern, but 2026 may be the pivot. Nearly every sector except data centers shows stronger growth projections in 2026. That signals faith among economists that inflation will ease, rates will settle, and construction financing will regain its footing. The lighting industry may want to treat 2025 as the year to tighten up — and 2026 as the one to sprint.
