Construction Costs Update: Escalation, Labor, and Market Forces Shaping Project Budgets
By Thad Berkes
February 3, 2026Post Tagged in
It’s no surprise that megaprojects have dominated the commercial construction market in 2025 with $134 billion dollars at a 47% increase from 2024.The growth with AI and the need for more data centers has had a persistent demand for commercial construction without showing any slowing down. |
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“Activity remains strong, with data centers and industrial projects continuing to be major drivers of demand, while healthcare, sports, and aviation markets remain very active.”
Attilio Rivetti Vice President, Turner Construction
2025 Escalation ReportDesign Collaborative uses multiple resources to assist in forecasting expected escalation to help team members along with clients with cost increases that may accrue during the design process.
2025 Escalation Quarterly Reports 4th Quarter 2025 – 1.15% (prediction) 3rd Quarter 2025 – 1.15% 2nd Quarter 2025 – 1.17% 1st Quarter 2025 – 1.18% 2025 Escalation – 5.80% |
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2025 Construction Unemployment RatesUnemployment rates have had the usual ups and downs depending on weather conditions, but nothing has stood out looking back at historical rates. Indiana was among the lowest estimated construction unemployment rate of 2.2%. Ranking 4th in the country with North Carolina coming in at 3.7%. The national average in the United States was 4.6% for 2025. The graph below from the FRED for unemployment has not seasonally adjusted for the past 5 years. We have not seen much of a difference when it comes to unemployment rates around at a higher figure of 7% during the winter months and 3% lower figure throughout the summer cycles. Construction employees in the construction sector include: Working supervisors, qualified craft workers, mechanics, apprentices, helpers, laborers, and so forth, engaged in new work, alterations, demolition, repair, maintenance, and the like, whether working at the site of construction or in shops or yards at jobs (such as precutting and preassembling) ordinarily performed by members of the construction trades. |
