The construction sector decreased by 0.1 percent on the quarter in Q3 2024, marking the first decline since Q2 2022. This downturn is not attributed to a single factor but rather a combination of high interest rates, a challenging borrowing environment, and election-related uncertainty. These conditions have dampened construction spending, leaving many projects in the planning stage.

For Q3 2024, commercial real estate spending decreased 13.1 percent on the year, the fourth consecutive decrease since Q3 2023. The commercial market is currently facing many uncertainties that are affecting further private investment in the space, including shifts in how tenants occupy commercial spaces and sustainability.

With office spending, there is growth of 2.4 percent on the year for Q3 2024. However, a major factor for this figure is significant data center spending. Still, the office market is on the right trajectory, with many uncertainties regarding the future of the workplace beginning to stabilize, such as attendance policies. Class A market buildings continue to thrive as there is an ongoing ‘flight to quality’ trend. Furthermore, according to CBRE’s Office Occupier Sentiment Survey, the percentage of companies looking to expand their office space portfolio has increased to 38 percent in 2024, up from 20 percent in 2023. A growing concern is the looming wall of maturity in 2025 and beyond for commercial and office real estate loans, which has the potential to exacerbate the current difficult lending environment.

For manufacturing, the outlook is positive, as many companies are continuing to onshore manufacturing back into the US, including biotech, chips and electric vehicles (EVs). Infrastructure continues to be funded heavily by the Infrastructure Investment and Jobs Act (IIJA), although dropping to single-digit growth at 7.2 percent on the year for Q3 2024. According to the AGC Hiring and Business Outlook Report, only 15 percent of survey respondents have won bids under the IIJA, suggesting there is public funding yet to be unlocked. With the incoming presidential administration, it remains to be seen what policy changes will be tailored toward manufacturing and infrastructure funding going forward, but historically, the administration has de-emphasized sustainable projects.