Three key sectors will drive nonres construction spending in 2026

Building Teams that collaborate early and structure contracts that manage risk effectively are likely to have the most success next year, when construction spending growth is expected to slow to an estimated 2.6%.

That’s the prognosis from PCL Construction’s recently released 2026 Construction Industry Outlook, written by Deron Brown, PCL’s President and COO-U.S. Operations. The Outlook identifies three key sectors to watch about how they might influence the industry’s overall movement.

•Data Centers. Spending on data center construction increased by more than 33% in 2025 and is expected to grow by another 20% in 2026. The one possible impediment is power availability, as more data center projects are being delayed by long wait times for electrical grid connections. Most new energy capacity is likely to come from high-efficiency natural gas plants. PCL also cites renewed interest in nuclear power as “encouraging,” even though small reactor development is still years from significant practical deployment.

•Water Resilience. Nearly 30 million Americans live in areas with limited water availability. Consequently, more cities are embracing potable water reuse and advanced nutrient removal. Citing Bluefield Research, PCL states there are more than 600 water reuse projects in various stages of development. Total investment in municipal water reuse infrastructure and treatment systems is expected to reach $47.1 billion by 2035. And as infrastructure projects increase in scale and complexity, delivery models have been shifting toward collaborative approaches like Progressive Design-Build and Construction Manager at Risk.

Each of these key sectors will require construction manpower that isn’t getting easier to find or hire. Associated Builders and Contractors projects that the industry will need to add 499,000 workers in 2026 just to keep up with spending increases, a daunting prospect. So to meet current building demand without sacrificing speed or quality of work, “AI adoption in the industry must accelerate,” asserts PCL.

AI is already streamlining business processes, freeing staffs to focus more on jobsite tasks. AI is also improving safety protocols, reducing delays and enhancing productivity by as much as 30%, according to Construction Leadership Network estimates that PCL’s Outlook cites.