JLL is cautioning commercial real estate stakeholders to prepare for another demanding year in the building sector, as a mix of policy shifts and economic crosscurrents continues to complicate planning.

A murky 2026 outlook:

According to the firm’s new forecast, the construction industry isn’t expected to gain stable momentum next year. Ongoing volatility in trade and immigration policy is creating ripple effects across scheduling, pricing, and project execution. Even with some macroeconomic stabilization, the report suggests that uncertainty—particularly around labor and materials—will remain a defining theme.

Cost pressures won’t ease:

Since 2020, construction expenses have surged roughly 39%, significantly outpacing overall inflation. Despite a notable cooldown in 2025, with cost growth slipping below 1%, JLL anticipates that tariff impacts and complicated material sourcing will keep budgets elevated through 2026 and likely beyond.

Labor challenges intensify:

Workforce constraints are expected to deepen as experienced workers retire, fewer new laborers enter the field, and immigration-tightening measures limit additional supply. JLL projects little to no growth in nonresidential construction jobs by 2026, making regional labor capacity a critical competitive factor.

Spending sees mild growth:

Overall construction expenditures are projected to inch higher. Civil engineering should hold steady, nonresidential activity may retract slightly, and residential development is poised to lead the sector—rising from about $860 billion to an estimated $940 billion by 2027, reflecting continued confidence in housing demand.

➥ THE BOTTOM LINE

Flexibility becomes the winning strategy. Construction is not in freefall, but 2026 is shaping up to be a balancing act. Developers who stay nimble—adapting to local labor dynamics, supply challenges, and cost pressures—will be best positioned to navigate the year’s uneven terrain.