Are you planning a major facility renovation or new build in 2026? The state of the construction industry, itself, could have an impact on your project.
JLL’s Project and Development Services (PDS) recently released its 2026 U.S. Construction Perspective, revealing how policy-driven market dynamics are creating distinct regional opportunities and competitive advantages across the construction landscape.
“The construction industry is navigating an unprecedented convergence of policy impacts that are fundamentally reshaping market dynamics,” said Louis Molinini, JLL’s head of PDS for the Americas. “While much of 2025 was at a standstill due to uncertainty, we now have directional clarity that enables strategic positioning for organizations ready to move beyond reactive approaches.”
Construction spending fell 4.7% in 2025, illustrating the substantial impact of market uncertainty on industry performance. While JLL projects a return to positive territory with 0.4% growth in 2026, this near-flat trajectory underscores ongoing industry pressures and the critical need for localized strategies and adaptive project delivery.
Material cost pressures are expected to intensify throughout 2026. According to the report, policy instability and reduced construction demand delayed trade impacts from materializing, creating conditions where cost increases will accelerate with activity.
Construction employment faces structural challenges that extend beyond current market conditions. While reduced construction demand has masked underlying workforce constraints, JLL predicts these latent risks will become acute issues when construction starts rise in earnest. According to the report, the industry’s traditional employment growth patterns face fundamental disruption with current immigration policies, creating potential bottlenecks as activity accelerates.
“Success in 2026 will require big-picture thinking with granular attention to local market details,” said Jaymie Gelino, PDA’s COO and head of Work Dynamics accounts. “Regional exposure to policy impacts varies significantly, creating new growth opportunities that aren’t immediately apparent under traditional market analysis. Even markets facing bigger impacts from ongoing uncertainty remain viable for projects that are matched to local conditions and risks, making granular market understanding essential for identifying the best opportunities.”
For example, gateway cities like New York have both advantages and vulnerabilities due to their size and diversity. According to the report, the cities’ large immigrant populations and strong economic connections make them more sensitive to policy changes, but these same features also drive their long-term growth potential. These cities have the infrastructure, talent, and capital access needed for success. Organizations can manage policy risks while leveraging these strengths through early contractor partnerships, flexible risk-sharing arrangements, and tailored procurement strategies.
“Planning for future activity must account for structural workforce constraints now, as market challenges may compound when construction activity accelerates,” said Andrew Volz, research manager of PDS. “The intersection of trade policy, immigration enforcement, and local economic conditions requires a wholly integrated approach to accurately assess risks.”
Strategic positioning in 2026 will determine success for projects when investment activity accelerates. According to the report, efficient planning across industries and markets to address their specific needs is crucial.
Read the full report here.