News Summary
The construction industry in New Jersey is expected to see strong growth, with a projected 17% increase in spending and a robust project pipeline. Despite national declines, state-specific economic policies and reduced interest rates are fostering new developments. Concerns remain over rising construction costs and labor shortages, but the overall outlook remains optimistic with potential infrastructure investments set to bolster local economies.
Construction Industry Forecast Shows Positive Growth in Long Branch, New Jersey
Long Branch, NJ — The construction industry in New Jersey is poised for robust growth in the coming years, supported by rising spending, increased project starts, and favorable economic policies. These insights were shared during the recent Fall 2025 Convention hosted by the Associated Construction Contractors of New Jersey (ACCNJ), which drew over 200 industry professionals at the Ocean Place Resort & Spa.
Optimistic Economic Outlook and Rising Construction Spending
Jeffrey Otteau, Managing Partner and Chief Economist of the Otteau Group, delivered a positive outlook for New Jersey’s construction sector. He highlighted that construction spending in the state is expected to increase by 17% compared to 2024, surpassing $16 billion in aggregate spending for 2025. This growth occurs despite a national decline in construction spending, which has decreased by 3% overall.
Impact of Federal Reserve Policies and Market Trends
The Federal Reserve’s decision to cut interest rates by a quarter percentage point on September 17, 2025, is anticipated to boost construction activity in New Jersey. Lower interest rates tend to reduce borrowing costs, encouraging developers and investors to initiate new projects. Although national commercial investment property sales declined from $13 billion in recent years to $6 billion amid rising interest rates, signs of recovery are emerging in the commercial real estate market.
Construction Costs and Inflation Trends
Rising construction costs have been noted extensively, with increases of 34% in North Jersey and 32% in South Jersey since the pandemic’s start. These elevated costs have posed challenges to project feasibility. However, recent trends in inflation—currently at a modest 2.9%—may ease cost pressures and facilitate new project development. Additionally, the price of Brent crude oil has decreased from $82 per barrel in 2023 to $68 in 2025, which could contribute further to lowering construction costs in the near future.
Sector-Specific Performance and Project Pipelines
Civil Construction Sector
The civil construction sector demonstrated significant growth in 2025, with a 145% increase in project starts and an 88% rise in spending. The sector’s expenditure grew from $1.40 billion in 2023 to an estimated $2.34 billion in 2025, reflecting increased infrastructure and public works investments.
Industrial Construction Sector
Conversely, industrial construction experienced a substantial 73% decline in project starts this year. Industry analysts describe this as a correction following excessive growth in recent years, indicating a temporary adjustment rather than a long-term downturn.
Multifamily Housing Market
The multifamily housing sector continues to show strength, with expenditures rising by 8% and construction starts increasing by 20%. This trend indicates a robust demand for apartment complexes and mixed-use developments, aligning with broader demographic shifts and urbanization patterns.
Future Outlook and Project Pipeline
The long-term outlook remains optimistic, with an estimated $140 billion worth of construction projects anticipated over the next five years in New Jersey. This pipeline encompasses a wide range of developments, including public infrastructure, commercial properties, and residential projects, which are expected to generate employment, economic activity, and tax revenue.
Labor Market and Cost Challenges
Despite positive growth indicators, the sector faces notable challenges related to the labor market. There are concerns over insufficient numbers of younger workers entering construction trades, creating shortages that can drive wage inflation upward. This demand-supply imbalance is compounded by ongoing tariffs and geopolitical factors that may further increase material and labor costs.
Economic and Policy Factors Influencing Growth
Lower inflation rates and declining oil prices suggest an improving economic environment conducive to construction. The sector’s direct, indirect, and induced impacts are expected to support job creation and local economic development, emphasizing the importance of construction as a driver of regional growth.
In summary, New Jersey’s construction industry is set to experience significant expansion with increased spending, project starts, and future pipelines. While external factors such as labor shortages and tariffs remain concerns, the overall outlook remains positive, driven by favorable monetary policy and economic trends.
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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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