Key Takeaways:
- Spring 2026 construction is split: tech sectors drive demand while traditional commercial and residential lag.
- Construction cost escalation exceeded 6% year over year; copper up 29.5%, aluminum up 45.3%, structural steel rising.
- MEP labor shortages in data center and life sciences markets are tightening availability and inflating bid prices.
- Lock long-lead material buys, update escalation language and use local market data over national benchmarks.
Construction Market Split: Tech Leads, Traditional Sectors Lag
Skanska’s Spring 2026 Construction Market Trends Report finds a market divided between technology-driven projects and traditional commercial and residential work. Data centers, life sciences and advanced technology infrastructure continue to lead demand. Interest rates and policy shifts weigh on other sectors.
“As the construction industry moves further into 2026, market conditions remain uneven across sectors, with technology-driven projects continuing to outpace more traditional commercial and residential activity,” said Steve Stouthamer, executive vice president of project planning at Skanska USA Building.
Skanska’s composite cost index rose more than 6% year over year, with double-digit escalation in MEP trades tied to high-tech projects. Total construction starts reached a seasonally adjusted annual rate of $1.22 trillion in March, up 12.8%, led by a 37.9% jump in nonbuilding construction. The Project Stress Index rose to 104.6 in March, a 4.2% month-over-month increase, reflecting delayed bid dates, on-hold projects and some preconstruction abandonment.
What’s Driving Up Costs and Where Is Labor Tightest?
Materials inflation and MEP labor shortages in tech-heavy markets are the primary cost pressures. Metals have moved higher across nearly all categories. Copper is about $5.93 per pound, up 29.5% year over year. Aluminum is near $3,500 per ton, up 45.3%. Nickel is trending around $19,400 per ton, up 26.5%. Cold-rolled coil sits near $1.22 per pound after a 25.3% annual increase. Structural steel is climbing as demand from data centers and large manufacturing accelerates.
Energy volatility linked to geopolitical disruptions, including the Strait of Hormuz, has added fuel to transport and production costs throughout the supply chain.
On labor, construction added 9,000 net new jobs in April, including 19,000 positions in nonresidential construction. Employment rose 50,000 year over year, a 0.6% gain overall, while nonresidential employment increased 2.0%. MEP talent remains scarce in high-demand markets, feeding higher subcontractor bids and schedule pressure.
Regional conditions vary widely. Markets with heavy concentrations of data centers and life sciences campuses face steeper escalation and labor friction. Cost plans that rely on national averages risk missing the mark.
How Should Owners and Project Managers Respond?
Proactive procurement and disciplined budgeting are the clearest risk mitigators available. Owners and contractors that manage commodity exposure early are better positioned to protect budgets. Teams should lock long-lead material buys where feasible, review escalation clauses and consider approved substitutions that reduce risk without compromising performance.
Contract teams should refresh escalation language and buyer protections, then align those terms with material strategies and trade engagement plans. Proactive communication with key subcontractors and fabricators can surface pinch points early and improve pricing certainty.
For project managers, location and scope will drive cost performance more than any single macro indicator. Projects near technology hubs should assume higher MEP trade pricing, constrained fabrication slots and lead times that can push critical path activities. Projects in markets with less high-tech intensity will still feel energy and tariff exposure but may find more competitive trade coverage. Disciplined budgeting that incorporates commodity tracking, local market intelligence and contingency planning will improve outcomes.
(Note: AI assisted in summarizing the key points for this story.)