September 29, 2025

New Jersey Construction Industry Sees Promising Growth

News Summary

The New Jersey construction industry is projected for significant growth, with spending expected to rise by 17%. Despite national economic uncertainties, local resilience is highlighted by increased project starts, particularly in the civil sector. Challenges like rising costs and labor shortages remain, but the overall outlook is optimistic, with a substantial project pipeline enhancing job creation and economic impact.

Long Branch, New Jersey — Construction Industry Forecast Signals Positive Growth Despite Challenges

The New Jersey construction industry is on a promising growth trajectory for 2025, according to recent insights shared at the Fall 2025 Convention hosted by the Associated Construction Contractors of New Jersey (ACCNJ). Over 200 industry professionals gathered at the Ocean Place Resort & Spa in Long Branch to discuss the sector’s outlook, which remains largely optimistic despite broader national economic uncertainties.

Rising Construction Spending and Project Starts

Economic experts presented data indicating that construction spending in New Jersey is projected to increase by 17% over 2024 levels, reaching a total of more than $16 billion in 2025. This upward trend is driven in part by recent monetary policy decisions, particularly the Federal Reserve’s quarter percentage point interest rate cut announced in September 2025. Lower interest rates are expected to boost construction activity by making financing more accessible and affordable for project developers.

Despite a 3% decline in national construction spending, New Jersey continues to demonstrate resilience and growth. The local construction sector is outperforming broader trends, with increased project starts and investment as a result of favorable economic conditions. Notably, the civil construction sector experienced a remarkable 145% increase in project starts and an 88% increase in spending this year alone.

Sector-Specific Trends and Project Pipeline

The civil sector’s expenditure grew from $1.40 billion in 2023 to $2.34 billion in 2025, reflecting robust activity. Conversely, the industrial sector faced a significant 73% drop in project starts this year, considered a correction following years of excessive expansion. The commercial real estate market has also seen fluctuations, with property sales falling from $13 billion to $6 billion as interest rates rose. However, signs of recovery are emerging in this space.

Construction for multifamily housing continues to expand strongly, with spending increasing by 8% and project starts rising by 20%. This indicates sustained investor interest in apartment projects, likely driven by housing demand in the region.

Looking ahead, the construction pipeline is substantial, with an estimated $140 billion in potential projects scheduled over the next five years. This pipeline encompasses a wide array of developments, including infrastructure, commercial, residential, and industrial projects, which are expected to sustain employment and economic output in the state.

Impact of Costs and Labor Market Challenges

Construction costs have risen sharply since the pandemic’s onset, with increases of approximately 34% in North Jersey and 32% in South Jersey. This cost escalation poses challenges for project feasibility and budgeting. Recently, inflation has eased, with consumer prices increasing by 2.9%, which could help stabilize construction expenses moving forward.

The drop in Brent crude oil prices from $82 per barrel in 2023 to $68 in 2025 further indicates easing inflation pressures, potentially reducing material costs. However, ongoing labor shortages remain a concern. There is a notable insufficient influx of young workers entering construction trades, leading to wage inflation driven by a demand-supply gap. These factors are poised to influence project costs and availability of skilled labor in the coming years.

Economic and Policy Implications

The industry’s growth is expected to have significant economic impacts locally, including job creation, increased tax revenues, and further stimulation of related sectors. Construction activity not only generates direct employment but also evokes positive ripple effects through indirect and induced economic contributions.

Nonetheless, ongoing challenges such as labor shortages and tariffs could temper expansion. Policymakers and industry leaders are closely monitoring these issues, recognizing their potential to affect costs and project timelines. Despite these hurdles, the sector’s overall outlook remains optimistic due to favorable interest rate trends, declining inflation, and a substantial project pipeline.

In summary, New Jersey’s construction industry is projected to experience positive growth in 2025, driven by increased spending, project initiation, and sector-specific advancements. While cost and labor challenges persist, current economic conditions foster a conducive environment for continued development and economic contribution over the near term.

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