The American Institute of Architects' Consensus Construction Forecast panel now expects nonresidential building construction spending to decline 0.3 percent in 2026 and then rise 3.0 percent in 2027 — a downgrade from January, when the same panel projected a 1.0 percent gain in 2026, and an upgrade to 2027 from 2.2 percent (American Institute of Architects).

The revision is small in headline terms and large in what it reveals about market composition. Nearly all of the growth in the forecast comes from one building type.

Sector Forecasts

Projected percent change in nonresidential building construction spending, per the panel consensus (AIA Consensus Construction Forecast, July 2026):

• Nonresidential total: −0.3 percent in 2026, +3.0 percent in 2027
• Commercial total: +4.8 percent, then +5.8 percent
• Data centers: +33.0 percent, then +24.7 percent
• Office: +9.6 percent, then +9.2 percent
• Hotel: +4.6 percent, then +5.2 percent
• Retail and other commercial: +0.7 percent, then +2.7 percent
• Warehouse: −1.7 percent, then +1.4 percent
• Manufacturing: −11.6 percent, then −0.6 percent
• Institutional total: +2.8 percent, then +2.7 percent
• Health: +2.6 percent, then +4.4 percent
• Education: +1.2 percent, then +0.9 percent
• Amusement and recreation: +7.1 percent, then +3.0 percent

An Important Definitional Catch

The forecast tables report Office at +9.6 percent for 2026, but AIA's own commentary states that traditional offices are forecast to decline 5.1 percent in 2026 and 4.5 percent in 2027, and that office construction had already lost 22 percent from its pre-pandemic peak by 2025 (American Institute of Architects; AIA forecast tables).

Both figures are correct. Census construction spending classifies data centers within the office category, so the reported +9.6 percent "office" number is data centers pulling a shrinking conventional office market upward. Anyone quoting a positive office forecast without that caveat is misreading the data.

AIA makes the same point about the commercial category: the 2026 upgrade is "almost entirely due to the rapid growth of data center activity," and excluding data centers the commercial outlook would be roughly −1 percent in 2026 and +1 percent in 2027, compared with a 3.2 percent commercial decline in 2025 (American Institute of Architects). Data centers are expected to account for roughly 8 percent of all nonresidential building spending by 2027 (American Institute of Architects).

Where the Panel Disagrees

The consensus masks unusually wide dispersion among the nine forecasting organizations. For nonresidential total spending in 2026 (HPAC Engineering; AIA forecast tables):

• ConstructConnect: +4.7 percent (2027: +6.7 percent)
• Wells Fargo Securities: +1.9 percent (2027: +4.4 percent)
• AIA: −0.3 percent (2027: +3.0 percent)
• Dodge Construction Network: −1.3 percent (2027: +2.9 percent)
• Moody's Analytics: −1.4 percent (2027: +1.6 percent)
• Markstein Advisors: −1.4 percent (2027: +0.3 percent)
• Piedmont Crescent Capital: −1.5 percent (2027: +4.1 percent)
• FMI Corp.: −1.7 percent (2027: +3.6 percent)
• Associated Builders and Contractors: −1.9 percent (2027: +0.2 percent)

That is a 6.6-percentage-point spread for 2026 between the most and least optimistic panelists. On manufacturing, the range runs from ConstructConnect at +1.3 percent to ABC at −16.5 percent (AIA forecast tables). When professional forecasters differ that much, the honest conclusion is that the market's direction genuinely depends on variables — interest rates, tariff policy, AI capital spending durability — that nobody can currently pin down.

Manufacturing Is the Big Downgrade

Manufacturing construction is forecast to fall 11.6 percent in 2026 after a 6.7 percent decline in 2025, and AIA identified it as the largest downgrade in the revision (American Institute of Architects). Even so, AIA notes activity is expected to remain robust by historical standards (American Institute of Architects). That is the natural consequence of a wave of semiconductor, battery and pharmaceutical plants moving from construction into operation.

Warehouse tells a similar story: spending peaked at $80 billion in 2023 and reached $55 billion in 2025, 31 percent below peak, with a further 1.7 percent decline forecast for 2026 (American Institute of Architects).

Why It Matters to Construction Professionals

AIA Chief Economist Richard Branch described the outlook as "increasingly K-shaped," saying that "parts of the market tied to public funding, health care demand, and AI-related investment continue to move forward, while more interest-rate-sensitive and discretionary sectors remain under pressure" (HPAC Engineering).

For firms, that means a flat national number can coexist with an excellent or terrible year depending on which sectors you serve. A contractor built around distribution centers and manufacturing plants faces a materially different 2026 than one serving hospitals, recreation facilities and hyperscale computing.

Implications for Owners, Developers, Contractors and Subcontractors

For owners and developers, the panel's upgrade of 2027 alongside its downgrade of 2026 suggests, in the words of the reporting, that "the anticipated recovery has been delayed rather than eliminated" (HPAC Engineering). Projects designed now for 2027 starts may compete for capacity with a broader recovery.

For general contractors, sector diversification is doing real work in this cycle. Health care at +2.6 percent in 2026 and +4.4 percent in 2027, and amusement and recreation at +7.1 percent, are the reliable institutional bright spots — AIA cites the $990 million Continental Coliseum in Oklahoma City and the new Washington Commanders stadium as examples (American Institute of Architects).

For subcontractors, the mechanical and electrical trades benefit most from the data center concentration, while structural, site and envelope trades tied to manufacturing and warehouse work face the steepest declines (AIA forecast tables). Firms should be candid with themselves about whether their backlog reflects the growing half of the market or the shrinking half.

What to Watch Next

AIA updates the Consensus Construction Forecast twice yearly, so the next revision will be the January 2027 edition. Between now and then, the variables that would move the consensus are: the durability of AI-related capital spending, the path of interest rates, and whether education spending — forecast at just +1.2 percent in 2026 and +0.9 percent in 2027 — reflects a genuine slowdown in school bond activity (AIA forecast tables).

Also watch whether the manufacturing decline stabilizes as forecast. The consensus expects −11.6 percent in 2026 improving to −0.6 percent in 2027; ABC's panel entry, by contrast, projects −13.0 percent in 2027 (AIA forecast tables). That disagreement has direct consequences for industrial contractors' 2027 planning.

Bottom Line

The consensus is for nonresidential building spending to slip 0.3 percent in 2026 before growing 3.0 percent in 2027, with data centers up 33 percent and manufacturing down 11.6 percent (American Institute of Architects). Strip out data centers and the commercial market is roughly flat to slightly negative. The number to plan around is not the national total — it is the forecast for the specific sectors your backlog depends on.

Sources

• American Institute of Architects — July 2026 Consensus Construction Forecast: https://www.aia.org/resource-center/july-2026-consensus-construction-forecast
• AIA Consensus Construction Forecast, July 2026 data tables: https://forecast.aia.org/2026/Charts/Jul%202026/ccf_072126_v2.html
• HPAC Engineering — "AIA Consensus Forecast Revised Downward," July 31, 2026: https://www.hpac.com/association-solutions/news/55395043/aia-consensus-forecast-revised-downward