On June 4, 2026, ConstructConnect Chief Economist Michael Guckes delivered a clear-eyed forecast to the construction industry that stripped away the usual top-line optimism: the U.S. construction market is growing, but nearly all of that growth is concentrated in a narrow set of subcategories and a handful of geographic markets. For contractors who have been watching headline spending figures and assuming broad participation in the expansion, Guckes offered a pointed correction. "Which subcategories you decide to compete in, along with which geographies — those are the two most important things that will decide your company's future," he said at ConstructConnect's Spring 2026 Construction Economy Outlook event.

The K-Shape Is Real — And It Is Widening

The phrase "K-shaped market" has been circulating in construction economics circles for two years. The data from the first half of 2026 confirms it. ConstructConnect's Q2 2026 forecast calls for 1.5 percent growth in nonresidential building construction in 2026 — but with a critical asterisk. Without data centers, nonresidential building would contract roughly 9 percent in 2026. The entire nonresidential building sector's forward growth is attributable to one subcategory that barely existed at scale three years ago.

Richard Branch, AIA Chief Economist, described the underlying tension: "Real construction activity, that is boots on the ground, has been flat at best in the non-residential building space." He added that developers are considering projects but retreating at the cost stage: "They're asking about building projects. But as soon as they get the cost, as soon as they look at budgets, labor, and financing, they get a case of the yips and either slow the project down or cancel it outright." ConstructConnect's expert roundup found that client indecision accounted for 20.1 percent of project delays, while changing market conditions accounted for 17.9 percent and insufficient budgets 17.5 percent.

Data Centers: 92 Percent of the Office Category

The transformation of the construction industry's "office" category is one of the defining structural shifts in decades of American building history. As recently as 2023, data centers represented under 2 percent of office-category construction dollars. In 2026, they represent 92 percent. ConstructConnect's Q2 2026 forecast projects office-category spending — now almost entirely data centers — at $826 billion over the next five years, with starts roughly doubling from 2025's $82 billion level at the peak around 2029 to 2030. Power infrastructure to feed those facilities is forecast to grow 55 percent over the same five-year window, at a compound annual growth rate of 9.2 percent.

Megaprojects are amplifying the concentration. Michael Guckes noted that projects valued at $1 billion or more now make up more than 25 percent of all nonresidential spending — up from approximately 10 percent historically. In the first quarter of 2026, megaproject starts reached $57.7 billion, up from $21.9 billion in the same period of 2025. The EFCG Weekly Briefing of May 29 confirmed that ConstructConnect's Summer 2026 Construction Starts Forecast projects total starts to rise 0.8 percent in 2026, with first-quarter starts already up 12.6 percent year over year — but that growth is driven almost entirely by these megaprojects.

The Verified Pipeline: Which Sectors Are Actually Growing

ConstructConnect's research team tracks verified private planning activity — project leads at the design and preconstruction stage, before public RFPs are posted. That data tells a striking story about where actual demand is forming. Year-over-year in ConstructConnect's U.S. pipeline: industrial construction is up 341 percent, driven almost entirely by AI supercomputer facilities and manufacturing reshoring; data centers are up 94 percent; multi-residential is up 64 percent; retail is up 40 percent; and medical is up 23 percent. Warehouse and distribution — the dominant growth category of 2021 to 2023 — has dropped nearly 20 percent. Public planning projects are down 20.6 percent as past administration infrastructure stimulus winds down.

Kristy O'Brien, ConstructConnect's Director of Content Acquisition, offered a ground-level view from the firm's project sourcing teams: "Owner sentiment is genuinely improving. There's a 'we can't wait anymore' feeling that we didn't hear this time last year." That emerging urgency is concentrated in the industrial and digital infrastructure categories — owners of AI data centers, manufacturing facilities, and power generation projects who are responding to commercial demand signals that cannot be deferred. Outside those categories, the "wait and see" posture described by Branch remains the dominant mode for most commercial and institutional owners.

The Geography Decision: Where the Work Actually Is

The geographic dimension of Guckes's warning is equally stark. ConstructConnect's May 2026 regional analysis found that year-to-date construction activity through April is sharply divided. The East North Central Census division (Ohio, Indiana, Illinois, Wisconsin, Michigan) is up 91.4 percent year to date, driven almost entirely by a concentration of large industrial and data center projects: Indiana is up 422.7 percent and Illinois is up 352.5 percent. The Pacific division is up 43.3 percent and the Middle Atlantic up 42.3 percent. Meanwhile, New England, East South Central, and Mountain are each down more than 11 percent. For civil and infrastructure work, coastal markets are receiving the investment while the Central U.S. lags.

The practical implication: contractors who have historically relied on being broadly active in their home markets may find that their geography is one of the underperforming regions. Guckes's prescription is not to abandon a home market but to understand it clearly — and to know which subcategories within it are growing versus contracting. A civil contractor in the Mountain division may find that infrastructure work is soft locally even as data center projects in Indiana and Texas are absorbing regional capacity from elsewhere.

Structural Headwinds That Won't Go Away

Alongside the strategic forecast, ConstructConnect's expert panel identified several persistent structural challenges that will shape contractor profitability regardless of which subcategory or geography they choose. Labor productivity in both the U.S. and Canadian construction sectors is down roughly 10 percent from 2019 levels — a post-COVID decline that has not reversed despite strong demand. Ken Simonson, AGC's chief economist, noted that new hires as a percent of the construction workforce are at the lowest level in the 25-year history of the BLS Job Openings and Labor Turnover Survey (JOLTS). Contractors are not advertising for jobs. They are holding onto the workers they have. "They sure want to hang on to the workers who are still there," Simonson said.

On wages, the Construction Labor Research Council found that union construction settlements averaged 4.7 percent increases in 2025, up sharply from the 1 to 3 percent typical in 2022 to 2023 contracts. Non-union firms are expecting 4 to 4.5 percent pay increases by end of 2026. On materials, tariff-related cost increases have not yet been fully passed through to owners — meaning further upward pressure on bid prices is ahead. Guckes summarized the forward outlook with characteristic directness: "You don't want to just look at top-line numbers. You really need to get below the surface."

Sources

ConstructConnect — The Two Decisions That Will Shape Construction Business Through 2030, June 4, 2026
ConstructConnect — What Construction Experts Are Warning About the Industry, June 5, 2026
ConstructConnect — Regional U.S. Construction Activity Splits Sharply Through April, June 2, 2026
EFCG — Weekly Briefing: May 29, 2026
ConstructConnect — June 2026 Data Center Report, published May 27, 2026