ConstructConnect Just Upgraded Its Nonresidential Starts Forecast — What the Data Center Surge and Residential Slide Mean for Your Fleet

ConstructConnect just made a meaningful upward revision to its nonresidential construction starts forecast for 2026, and the revision is worth understanding in detail because it tells you a lot more than "the market's growing." It tells you specifically where the growth is coming from, which sectors are shrinking to make room for it in a labor and materials market that can't expand everything at once, and what that rotation means for which kind of equipment demand is actually accelerating heading into 2027.

The Headline Numbers

ConstructConnect's Autumn 2026 Construction Starts Forecast puts total U.S. construction starts growth at 2.1% for the year, with year-to-date activity through June already running 6.5% ahead of the prior year, a healthy pace by most historical standards. The forecast pairs that with 2.3% projected U.S. GDP growth for 2026 and notes that expectations for the next Federal Reserve rate cut have pushed out to September 2027, later than the December 2026 timeline the market had been pricing in earlier in the year. None of those top-line numbers is the real story, though. The real story is inside the nonresidential building category, where ConstructConnect raised its 2026 growth forecast to 8.7%, an upgrade of more than five full percentage points from its prior outlook, and one of the larger single-report forecast revisions the industry has seen in this cycle.

One Sector Is Driving Almost the Entire Upgrade

The forecast is explicit about where that 8.7% nonresidential building number is coming from: private offices, a category that in ConstructConnect's data includes data centers, are projected to grow 83.1% in 2026. Data center investment specifically accounts for nearly $78 billion of the anticipated increase in commercial construction spending, and the report states plainly that without the data center segment, commercial construction would show virtually no growth at all this year. That's a remarkable concentration. A single subsector, driven almost entirely by hyperscale computing and AI infrastructure buildout, is responsible for the entire headline improvement in nonresidential construction, while the rest of commercial construction is treading water.

Civil construction is also expanding at a healthier 3.6% pace for 2026, with power-sector investment up 7.8%, a category directly tied to the same data center and grid-capacity buildout driving the private-office numbers. Institutional construction, schools, hospitals, government facilities, is projected to grow 7.4%, a genuine bright spot that's separate from the data center story and worth tracking on its own for contractors who work that sector. Put those three numbers together, civil, power, and institutional, and there's a broader growth story here than just data centers alone, even though data centers remain the single largest driver by dollar volume.

The Sectors Shrinking on the Other Side of the Ledger

Growth this concentrated in one place usually comes paired with real softness somewhere else, and this forecast has two sectors showing genuine declines. Residential construction starts are projected to fall 10.5% for 2026, with single-family starts down 5.9% specifically. First-half 2026 single-family permitting activity came in at just 462,000 units, a three-year low, and a clear signal that the housing side of the market has cooled meaningfully even as commercial construction accelerates. Manufacturing construction is the other major decliner, projected down a striking 43% for the year, a sharp pullback after the reshoring-driven manufacturing construction boom of the past several years cooled off faster than many forecasters expected.

That manufacturing pullback is worth dwelling on for a moment, because it runs counter to a lot of the "reshoring boom" narrative that's dominated industrial-construction coverage for the past few years. Announced mega-projects and groundbreaking ceremonies generate headlines, but this forecast is a reminder that announced investment and actual construction starts don't always move in lockstep, and a contractor who built a backlog assumption around continued manufacturing-plant construction growth is looking at a materially different 2026 than that assumption implied.

What the Rotation Means for Your Fleet

If your backlog leans heavily on residential site development, single-family lot grading, or subdivision infrastructure work, this forecast is a real signal to diversify your pipeline over the next year rather than waiting for single-family starts to recover. If your backlog leans toward manufacturing-plant construction, a similar caution applies: the reshoring-driven boom that fueled a lot of industrial site work over the past few years is genuinely cooling according to this data, not just anecdotally. On the other side, excavation, grading, and civil site-development contractors positioned to bid data center, institutional, and power-infrastructure work are looking at a genuinely stronger demand environment heading into 2027 than the headline national growth number alone would suggest.

The named trades most directly affected by this rotation are worth calling out specifically. Site-development and mass-excavation contractors who can pivot toward data center campuses and institutional projects, utility and power-infrastructure contractors serving grid-capacity buildout, and civil contractors bidding hospital and school construction are all positioned on the growth side of this forecast. Residential excavation and grading subs, and contractors whose backlog is concentrated in manufacturing or industrial plant construction, are the ones who need a genuine Plan B for where the next twelve to eighteen months of backlog comes from.

A Caution Worth Naming Directly

ConstructConnect's own forecast includes a note worth taking seriously: the pace of data center expansion is expected to moderate starting in 2027, shifting toward a more mixed outlook across the rest of the nonresidential sector. That means the current growth concentration in one subsector isn't guaranteed to persist at this intensity indefinitely, and contractors who build a business model entirely around data center work without a broader base risk facing the same kind of sudden demand shift that's currently hitting manufacturing construction. The smartest read of this data is to lean into the growth sectors now while they're strong, without abandoning the diversification that protects you when any single sector's growth pace inevitably normalizes.

Rent-vs-Own for a Fleet That Needs to Move Fast

A demand rotation this sharp rewards contractors who can move their equipment capacity toward the growing sectors quickly, and owned, financed equipment gives you that flexibility in a way a rental relationship doesn't. A rental company allocates its fleet toward whichever customer and sector is paying the most at any given moment, which means the busiest season for data center and institutional work is also the season when rental availability for excavators, dozers, and dump trucks gets tightest and most expensive. Owning your core fleet, financed on terms that match your actual project cash flow, means you're not competing with every other contractor chasing the same growth sectors for the same limited rental inventory.

This matters most for mass-excavation and grading contractors, since data center campuses and institutional projects both tend to require significant early sitework, mass grading, and utility installation before vertical construction even begins. That's exactly the phase of a project where excavators, dozers, and articulated haulers see their heaviest use, and it's exactly the phase where a contractor without owned equipment capacity is most exposed to rental-market tightness during the busiest bidding season this data describes.

The Florida Angle

Florida's own residential market has felt some of the same national cooling this forecast describes, even as the state's civil infrastructure, institutional, and data-center-adjacent private investment pipeline has stayed active. Contractors whose Florida backlog has leaned heavily on single-family site development should read this national data as a real prompt to diversify toward the civil, institutional, and commercial site-work opportunities the broader forecast shows growing, rather than waiting out a residential slowdown this data suggests may not reverse quickly.

The Bottom Line

A 2.1% national construction starts number sounds modest, but it's hiding a much sharper story underneath: nonresidential building is up nearly 9% on the strength of a data center boom that's carrying almost the entire commercial construction category, while residential and manufacturing construction are both falling hard. Positioning your fleet and your bid strategy for where the growth actually is, not where the headline number suggests, is the difference between riding this rotation and getting caught on the wrong side of it.

It's also worth watching how this plays out region by region rather than assuming the national pattern applies evenly everywhere. Data center and power-infrastructure investment has concentrated heavily in specific corridors with the land, power grid capacity, and fiber connectivity hyperscale operators need, while other metro areas are seeing far less of that specific growth. A contractor evaluating whether to chase this trend should look at what's actually breaking ground within a realistic bidding radius of their business, not just the national percentage, before making a major equipment commitment based on this forecast alone.

The financing timeline matters here too. Data center and institutional projects typically require mass-excavation and site-utility work to start well ahead of vertical construction, which means the contractors who win that early sitework are often bidding and mobilizing months before a project ever shows up in a completed-starts database. Getting equipment financing lined up now, ahead of a specific bid rather than after winning one, is what actually lets a contractor move fast enough to capture that early-phase work when it comes up.

This data center-driven rotation builds directly on ground we've covered before: our look at the $600 billion chip fab boom and the years of earthwork it's creating and our piece on how the data center construction boom is reshaping site-work demand both go deeper into that opportunity. On the residential side, our coverage of August's single-family starts rebound and falling builder confidence is worth reading alongside this forecast if your backlog leans toward home-site development.

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