September 29, 2025

New Jersey’s Construction Industry Sees Positive Growth

News Summary

New Jersey’s construction industry is poised for significant growth, with expectations for a 17% increase in spending compared to the previous year. A recent forecast by the Otteau Group predicts aggregate expenditures to exceed $16 billion. While national construction spending faces a decline, New Jersey shows resilience, driven by interest rate cuts and lower inflation. Challenges such as labor shortages remain, but overall, the next five years project a robust landscape for ongoing construction developments in the state.

Long Branch, NJ – Positive growth is on the horizon for New Jersey’s construction industry, according to a recent forecast presented at the Fall 2025 Convention of the Associated Construction Contractors of New Jersey (ACCNJ). Over 200 industry professionals gathered at the Ocean Place Resort & Spa to discuss the latest trends and projections affecting the sector.

Jeffrey Otteau, Managing Partner and Chief Economist of Otteau Group, delivered an upbeat economic outlook, highlighting that construction spending is anticipated to rise significantly in the state. Predictions indicate a 17% increase in local spending compared to 2024 levels, leading to aggregate construction expenditures in New Jersey exceeding $16 billion in 2025. This trend comes amidst a broader context where national construction spending has seen a 3% decline, underscoring New Jersey’s resilience in the sector.

The increased spending can be partly attributed to a recent quarter percentage point interest rate cut announced by the Federal Reserve on September 17, 2025. This reduction is expected to stimulate construction activities and encourage new project initiations. As interest rates generally decline, there is an anticipated uptick in economic growth alongside heightened construction demand.

Significantly, reduced inflation rates at 2.9% signal potential alleviation in cost pressures that have traditionally hampered project feasibility. The average price of Brent crude oil has also decreased from $82 per barrel in 2023 to $68 in 2025, indicating a potential decrease in inflation and construction costs going forward. Moreover, while commercial investment real estate property sales dipped from $13 billion to $6 billion due to rising interest rates, there are signs of recovery as the market stabilizes.

In the civil construction sector, there has been a remarkable 145% increase in project starts alongside an 88% rise in spending in 2025, with civil sector spending projected to grow from $1.40 billion in 2023 to $2.34 billion in 2025. However, the industrial construction sector experienced a notable 73% drop in starts, attributed to a necessary correction following previous rapid growth.

In the multifamily housing market, spending increased by 8%, while construction starts surged by 20%, suggesting a strong demand for apartment projects as housing needs escalate. Looking ahead, the projected pipeline of construction projects in New Jersey over the next five years is estimated to be around $140 billion, indicating a robust landscape for ongoing development.

Despite these positive trends, challenges remain, particularly concerning labor supply. Insufficient entry of young workers into the construction field raises concerns about workforce sustainability. Coupled with wage inflation driven by a demand-supply gap in labor, the sector faces ongoing pressures. These factors may impact future project execution and overall competitiveness.

Moreover, even as commercial property values begin to recover, the construction industry is poised to yield increased value, deal flow, and repair and improvement programs. The direct, indirect, and induced economic impacts of the construction sector are essential, playing a vital role in job creation and generating tax revenue that supports local economies.

As New Jersey’s construction industry looks towards a future of growth, stakeholders must remain cognizant of the potential hurdles, including labor shortages and tariffs that could amplify costs. With informed strategies and responsive measures, the state may continue to see its construction sector thrive, contributing positively to economic resilience.

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