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​​​​​United States Construction Outlook | Q4 2016

Modest but steady growth across all sectors in Q4 capped off a record-setting 2016 for the construction industry. In total, spending rose 4.5 times higher than year-end 2015 levels to nearly $1.2 trillion.

As 2017 continues, we expect political and policy decisions from the White House to greatly impact how business is done this year. Immigration legislation, labor laws, international trade deals and tariffs—combined with a hesitant industry—make a significant impact almost certain. But we aren’t seeing it just yet.

Despite the notable struggles in the West and Northeast, steady work down South and robust growth throughout the Midwest continue to offset any national slowdown. Expect the labor crunch to remain a major challenge for companies looking to hire given a lack of available skilled workers.

Our Q4 U.S. Construction Outlook explores the current state of the construction industry and expectations for the coming months. Specifically, we analyze national construction spending levels, the Construction Backlog Indicator and the Architecture Billings Index. And, we also dig into three key areas to watch: building costs, materials costs and the city cost index.

Get an overview of our findings with the resources here, or download the complete report for the full picture.

What to expect in 2017:

  • Through mid-year 2017

    Presidential policies affecting the construction industry will be passed, but won’t have concrete impacts until late 2017.

  • Through mid-year 2017

    Construction labor will still be a pain point for the industry at large, and wages will rise as a result. This will affect project timelines and budgets.

  • Through mid-year 2017

    Large construction loan lenders will weigh risk carefully and adjust standards to counter lagging demand to encourage increased borrowing.

  • By year-end 2017

    Regional slowdowns will begin to weigh on the national construction industry as a whole. Companies will turn their focus to the South and Midwest regions for business growth.

  • By year-end 2017

    Business dynamics in the construction industry will transform as labor and materials costs continue to rise. Firms will struggle to maintain sustainable profit margins.

  • By year-end 2017

    Full effects of Washington’s shifting policies will be felt across the nation. Changing trade deals, new import tariffs, immigration reform and large-scale infrastructure projects will significantly impact the construction industry.

Market comparisons: Click through the tables below to see office space under construction and cost by market.

Under construction (s.f.)

After delivering 12 million square feet of new supply, developers broke ground on more than 20 million square feet of projects, bringing the total pipeline to 101 million square feet. 65% of the total pipeline is in just 10 markets.

Market Under construction (s.f.)
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Market Cost Index Cost Rank % Natl avg.
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 Sector snapshots


Despite slowing growth, quarterly activity was strong across the board. Preleasing is up and the construction pipeline is at its highest level of this cycle.


Deliveries are on pace to beat 2015 levels. Growth remains steady as the sector hits its lowest vacancy rate in over 16 years.


Metrics suggest stability is coming back to the lodging industry. Occupancy remains at historic highs and transaction volume is soaring.


Though store closings are at a cyclical high, the impact on real estate has been limited. Thanks largely to increased apparel store demand and e-commerce disruption.

 Additional resources

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Get the latest on what's happening inside the construction industry directly from the desk of JLL's research team.

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See what our experts on construction management are talking about. From reviews of recent projects to leading industry research, we'll keep you in the know on all things project management.