News Summary
Recent reports indicate that the construction industry in New Jersey is on a path to significant growth. With a projected 17% rise in construction spending and substantial investment opportunities emerging, the sector is expected to surpass $16 billion. Factors such as decreasing interest rates and a reduction in inflation contribute to a favorable environment for construction. However, challenges such as labor shortages remain a concern. The industry is poised to drive economic value, highlighting the importance of its health for local economies.
Long Branch, New Jersey – The construction industry in New Jersey is poised for positive growth, according to a recent report presented at the Fall 2025 Convention of the Associated Construction Contractors of New Jersey (ACCNJ) held at the Ocean Place Resort & Spa. The event attracted over 200 attendees, including prominent leaders and stakeholders in the construction sector.
Jeffrey Otteau, Managing Partner and Chief Economist at the Otteau Group, forecasted a significant upturn in construction spending in New Jersey, predicting a rise of 17% above 2024 levels. Overall, construction spending in the state is expected to surpass $16 billion in 2025, highlighting a robust outlook for the industry in the coming years.
The encouragement for this growth comes alongside a recent decision by the Federal Reserve to lower interest rates by a quarter percentage point on September 17, 2025. This move is anticipated to trigger a surge in construction activity and project initiation, despite a slight decline of 3% in national construction spending. New Jersey, however, has shown resilience, with local spending demonstrating promising signs of expansion.
Data reflects a mixed performance across various construction sectors. While commercial investment real estate property sales dropped dramatically from $13 billion to $6 billion due to rising interest rates, there are signs of recovery. In terms of construction costs, which have escalated by 34% in North Jersey and 32% in South Jersey since the onset of the pandemic, the potential for lower interest rates and reduced inflation currently observed at 2.9% may ease the financial pressures faced by new projects.
The impact of declining oil prices also plays a role in shaping the construction environment. The average price of Brent crude oil fell from $82 per barrel in 2023 to $68 in 2025, suggesting a favorable trend in inflation and consequently lower construction costs. An impressive 145% increase in civil construction starts and an 88% rise in spending have been recorded this year, with civil sector spending anticipated to grow from $1.40 billion in 2023 to $2.34 billion by 2025.
Conversely, the industrial construction sector encountered a notable 73% decline in starts this year, a trend characterized as a market correction following excessive growth in previous years. On a brighter note, multifamily housing market activity suggests a strong demand, with an 8% increase in spending and a 20% rise in construction starts for apartment projects indicating a vibrant sector.
Looking further ahead, New Jersey boasts an impressive projected pipeline of construction projects approaching $140 billion over the next five years. While this potential growth is promising, challenges remain evident, particularly concerning the supply of labor. Labor shortages are becoming increasingly serious as fewer young workers are entering the construction field, leading to wage inflation driven by a mismatch in supply and demand.
Despite these obstacles, the construction sector is expected to drive an increase in economic value, deal flow, and necessary repair and improvement initiatives as commercial property values begin to recover. The industry’s critical role in job creation and tax revenue generation underscores the importance of its health to the prosperity of local economies.
In summary, while the New Jersey construction industry faces notable challenges, including labor shortages and escalating tariffs impacting costs, the overall outlook remains optimistic with significant anticipated growth for the years ahead. Stakeholders are poised to leverage favorable economic conditions and robust demand to capitalize on the opportunities available within the state’s construction landscape.
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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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