By Mary Klett, ASA Communications Team
U.S. construction in 2026 is shaping up as a year of rebalancing. Activity is not disappearing so much as moving—away from some traditional commercial categories and toward power-hungry, infrastructure-linked work like data centers, energy, and select public projects. Contractors and subcontractors that track where demand is concentrating—and tighten procurement and labor strategy—will be best positioned to protect margins.
1) Demand concentrates in “power + digital + infrastructure”
Multiple indicators point to continued strength in planning and backlog, even as sentiment becomes more cautious. Dodge Construction Network’s Dodge Momentum Index—a leading indicator tied to nonresidential planning—rose 7% in December and was up 37% in 2025 vs. 2024, signaling a healthier pipeline than many firms felt during parts of 2025.
Where is that work showing up? Industry surveys and forecasts consistently highlight data centers and power-related construction as standout categories. AGC’s 2026 outlook notes surging demand expectations for data centers and power facilities even as overall expectations “dampen” across other segments. External forecasts echo that concentration: ENR reports FMI expectations that data center construction remains a major growth driver into 2026 (albeit with a slower growth rate than the prior surge).
This concentration has real downstream impacts on subcontractors: more work tied to electrical, mechanical, controls, commissioning, and civil/site packages—and more schedule pressure from long-lead equipment (more on that below).
2) Nonresidential buildings stay sluggish, even if “megaprojects” grab headlines
While certain sectors are booming, the broader nonresidential building outlook remains modest. The AIA Consensus Construction Forecast projects nonresidential building spending growth to remain low, with overall spending on nonresidential buildings increasing only around 2% in 2026 (nominal, not inflation-adjusted).
That does not mean “no work”—it means more selective bidding environments, with tougher competition in slower categories like traditional office and some commercial interiors, and stronger pricing leverage where specialized capacity is constrained.
3) Labor remains the limiting factor—and it’s not just craft
Labor constraints continue to be structural, not seasonal. ABC estimates the industry will need to attract almost 500,000 new workers in 2026 to meet demand.
AGC’s survey results reinforce the point from the employer side: 63% of firms expect to add headcount in 2026, yet 82% report difficulty filling hourly craft positions and 80% report difficulty filling salaried openings.
For subcontractors, this shows up as wage pressure, productivity variability, and “capacity triage”—choosing which jobs to pursue based on crews, foremen depth, and the availability of critical specialties (e.g., electrical power distribution, controls, high-voltage work, piping, and niche fabrication).
4) Pricing and contracting keep evolving: more uncertainty clauses, more scrutiny
Even as inflation pressures have moderated from the 2021–2023 peak, pricing uncertainty is still a defining theme—especially where policy, tariffs, and domestic-content requirements affect inputs. AGC reports that roughly 70% of firms were impacted by tariffs, with many responding by raising bid prices or adding price-sharing terms, and some accelerating purchases to reduce exposure.
Owners, meanwhile, remain sensitive to financing and budget risk. In AGC’s survey, 63% of respondents report an owner postponed or canceled a project in the prior six months, commonly citing funding uncertainty and expensive financing.
Expect continued emphasis on tighter buyout, clearer escalation language, and more disciplined scope definition—especially on fast-track jobs.
Supply chain concerns: “better than 2022” but still a schedule risk in critical packages
Supply chains are no longer broadly broken, but they are uneven—and that’s what makes them dangerous. AGC reports that 45% of firms saw no supply-chain issues in 2025, yet many still changed behavior: 41% accelerated purchases after winning contracts, 29% used alternative suppliers, and 24% specified alternative materials or products.
The biggest pain points are exactly where 2026 demand is concentrating: electrical equipment (switchgear, transformers, generators, controls), plus HVAC/mechanical systems (chillers, air handlers, controls, insulation). Industry reporting also continues to document long lead times in power/electrical gear (e.g., switchgear and transformer categories), reinforcing why early procurement and approved-equals strategies matter.
For procurement strategy in 2026, the practical playbook looks like:
- Bid with real lead-time logic, not optimistic placeholders—especially for gear that gates energization and commissioning.
- Front-load submittals and approvals, and negotiate release terms that let you buy early without taking unmanageable risk.
- Use alternates and pre-approved substitutions where specs allow, and push clarity on domestic-content requirements that may lengthen lead times.
5) Technology adoption accelerates, mainly for estimating and office workflows
2026 is also a year where tech becomes less optional. AGC reports 61% of firms use AI or plan to increase investment in it, with notable use in office/admin functions and estimating.
The immediate trend isn’t robots on jobsites—it’s faster precon cycles, tighter takeoffs, improved document control, and more consistent risk review.
What this means for subcontractors in 2026
Expect a market where winners are defined by discipline: disciplined backlog selection, disciplined procurement schedules, and disciplined contract language. The opportunities are real—especially in data centers, power, and infrastructure-adjacent work—but so are the traps: long-lead equipment, labor scarcity, and tight commissioning dates. Build your year around capacity, not optimism, and treat supply chain planning as a core production activity, not an afterthought.
