News Summary
The construction industry in New Jersey is forecasted to see significant growth, with spending anticipated to rise 17% above previous levels. This optimistic outlook, presented at a recent convention, highlights a projected total of $16 billion in construction spending for the upcoming year, alongside expectations for job creation and increased project initiations. While challenges like labor shortages and rising costs exist, the state’s civil construction sector and multifamily housing markets are thriving, indicating a robust future ahead.
Long Branch, New Jersey – Positive Growth Projected for Construction Industry
The construction industry in New Jersey is on track for significant growth, according to a recent forecast presented at the Fall 2025 Convention organized by the Associated Construction Contractors of New Jersey (ACCNJ). Held at Ocean Place Resort & Spa, the event attracted over 200 attendees eager to discuss the future of construction in the state.
Managing Partner and Chief Economist of the Otteau Group presented an optimistic economic outlook, predicting local construction spending will increase by 17% above 2024 levels, approaching a total of $16 billion in 2025. This surge in spending is coupled with expectations for higher project initiations and job creation within the sector.
The recent reduction of interest rates by the Federal Reserve, which lowered rates by a quarter percentage point on September 17, 2025, is expected to further stimulate construction activities. Generally, declining interest rates are linked to economic growth, encouraging more development and investment in new projects.
Current Trends in New Jersey’s Construction Sector
Despite a national decline in construction spending by 3%, New Jersey’s construction industry is thriving. Notably, the civil construction sector experienced remarkable growth, with a 145% increase in project starts and an 88% growth in spending for the year. Civil sector expenditures rose from $1.40 billion in 2023 to $2.34 billion in 2025.
Moreover, the multifamily housing segment reported an 8% rise in spending and a 20% increase in project starts, indicating a robust market for apartment constructions. Conversely, the industrial construction sector faced challenges, experiencing a 73% drop in project starts this year, which was interpreted as a market correction after several years of excess.
Cost Implications and Economic Indicators
Construction costs have soared in the state, increasing by 34% in North Jersey and 32% in South Jersey since the pandemic began, complicating project feasibility. However, easing inflation rates, currently at 2.9%, as well as a decline in the average price of Brent crude oil from $82 per barrel in 2023 to $68 in 2025, could signal lower construction costs moving forward.
The prospect for the future remains bright, with a projected pipeline of construction projects in New Jersey forecasted at around $140 billion over the next five years. This expected surge is anticipated to generate substantial economic value, enhance deal flow, and provide various repair and improvement opportunities as commercial property values begin to recover.
Challenges Facing the Construction Industry
While the outlook is promising, the construction sector faces several challenges. Labor shortages have become a pressing concern, with insufficient numbers of young workers entering the industry. Additionally, wage inflation is problematic, stemming from an imbalance in labor supply and demand, which could impact overall project costs and timelines.
Despite these issues, the construction industry’s contributions to local economies are significant. The direct, indirect, and induced impacts of construction resound throughout local communities, driving job creation and tax revenues. As the sector is positioned for growth, stakeholders are urged to address labor supply concerns to sustain momentum.
Overall, New Jersey’s construction industry is poised for a vibrant period, underscored by rising expenditures and renewed investment interest, which may overcome ongoing economic and logistical challenges.
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Additional Resources
- NJBIZ: NJ Construction Outlook 2025
- Insider NJ: ACCNJ Report on Construction Industry
- Princeton Perspectives: 2025 New Jersey Economic Outlook
- NJBIZ: NJAA Construction Outlook
- ENR: ENR East 2025 Top Contractors
- Wikipedia: Construction
- Google Search: New Jersey construction industry news
- Google Scholar: New Jersey construction economic outlook
- Encyclopedia Britannica: Construction
- Google News: New Jersey construction 2025
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