{"id":33610,"date":"2025-12-14T22:58:11","date_gmt":"2025-12-15T06:58:11","guid":{"rendered":"https:\/\/essential.construction\/news\/feds-rate-cut-boosts-existing-construction-projects-more-needed-to-spur-new-builds\/"},"modified":"2025-12-14T22:58:11","modified_gmt":"2025-12-15T06:58:11","slug":"feds-rate-cut-boosts-existing-construction-projects-more-needed-to-spur-new-builds","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/feds-rate-cut-boosts-existing-construction-projects-more-needed-to-spur-new-builds\/","title":{"rendered":"Fed\u2019s rate cut boosts existing construction projects, more needed to spur new builds"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><br \/>\n        <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.constructiondive.com\/static\/img\/play.svg?500116090725\" alt=\"-\"><br \/>\n        Listen to the article<br \/>\n        <span class=\"text-to-speech__button__audio-length\">5 min<\/span><br \/>\n    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/text-to-speech.divecdn.com\/newspost\/807578\/2025-12-10_14.13.37\/feds-rate-cut-boosts-existing-construction-projects-more-needed-to-spur-n.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/contact\/\" target=\"_blank\">feedback<\/a>.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<p><span><span><span><span><span><span>Contractors sensed growing momentum across the construction market after the Federal Reserve again lowered interest rates Wednesday, its third cut of 2025.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The central bank trimmed its benchmark rate by another 25 basis points, which extends a gradual easing cycle developers hope will relieve borrowing costs heading into 2026.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Although the slash strengthens confidence around long-planned projects, industry leaders emphasized the small reduction in short-term rates still is not enough to unlock a surge of new nonresidential groundbreakings.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>In other words, the cut continues the right trend for contractors, but still will not materially reshape feasibility, said Granger Hassmann, regional president of Gulf States at Adolfson &amp; Peterson, a Minneapolis-based general contractor.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThe recent rate cuts by the Fed are good news, but I don\u2019t see this cut moving the needle very much,\u201d Hassmann told Construction Dive. \u201cIt is clearly a step in the right direction, especially if this trend continues over the next couple of months.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>For projects already deep in planning, the Fed\u2019s cut adds another nudge, but not enough to break ground immediately, said Scott Lyons, commercial core market leader at DPR Construction, a Redwood City, California-based general contractor. Construction planning activity slipped 1.1% in November, though still sits about <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/construction-planning-november-data-center-boom\/807215\/\" target=\"_blank\"><span><span><span><span><span><span><span>36% higher year-to-date<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> compared to the same period last year.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe think it will be another psychological boost that will continue momentum for those projects in the planning phase,\u201d Lyons told Construction Dive. \u201cIn the same breath, we don\u2019t believe it will trigger getting a shovel in the ground just yet for those projects.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Financing conditions remain tight, especially for commercial asset types still working through oversupply, said Lyons.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cLenders are going to continue to insist on signed tenants or legitimate demand for other project types, so we have an oversupply challenge in the commercial real estate space until more absorption happens in the office and R&amp;D space,\u201d said Lyons. \u201cWe think lenders are going to hold tight.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Capital market executives echoed that caution, noting long-term rates, not short-term cuts, will ultimately determine how quickly construction activity rebounds. Groundbreakings popped 21.1% in October, according to the latest report from Dodge Construction Network, largely due to <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/construction-starts-megaprojects-october-dodge\/806230\/\" target=\"_blank\"><span><span><span><span><span><span><span>high-value megaproject activity<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, predominantly data centers. Without those high-tech buildings, many of which are being financed with debt, growth appeared more moderate.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThe debt markets are currently extremely liquid throughout the capital stack,\u201d said Dan Levitt, executive vice president of capital markets at Ryan Cos., a Minneapolis-based construction firm. \u201cA small rate cut marginally reduces the cost of construction, and obviously, owners of real estate on short-term loans save a little on debt service.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>But without movement in the 10-year Treasury yield, which serves as a benchmark for long-term borrowing costs, construction starts will not meaningfully shift, Levitt said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThere is very little correlation at this point between a small rate cut by the Fed and the 10-year Treasury,\u201d Levitt told Construction Dive. \u201cIn other words, a small rate cut by the Fed is unlikely to substantively stimulate nonresidential construction starts.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Nevertheless, several sectors \u2014 including red-hot data centers and healthcare builds \u2014 will remain active regardless of rate changes, said Jason Gabrick, regional senior vice president of operations at Ryan Cos.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cSome emerging market sectors continue to remain almost rate-proof due to robust demand and effective capitalization strategies,\u201d Gabrick told Construction Dive. \u201cWe continue to see solid activity in data centers, life sciences, medical technology and healthcare projects, regardless of changes in interest rates.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<section class=\"storylines-carousel-wrapper hide-small show-large\" id=\"desktop-carousel\"\/>\n<h3 class=\"standard-heading\"><span><span><span><span><span>Looking ahead<\/span><\/span><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>Another problem lower rates can\u2019t solve is the worker shortage, which will remain a primary constraint on construction activity, said Lyons. Construction job openings were at <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/construction-job-openings-low-october\/807484\/\" target=\"_blank\">\u201c<\/a><\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/construction-job-openings-low-october\/807484\/\" target=\"_blank\">extraordinarily low\u201d levels in October<\/a><span><span><span><span><span><span>, along with a sharp drop in hiring, according to the most recent data from the U.S. Bureau of Labor Statistics.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cAcross the country, there are more projects that people want to build than there are people to build them,\u201d said Lyons. \u201cOur industry is taking steps to address that shortage, but we believe it will take a generation to build out the skilled labor workforce to meet demand.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Still, contractors say the stage is being set for a stronger 2026. All <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/contractor-backlog-strength-data-center-manufacturing\/805489\/\" target=\"_blank\"><span><span><span><span><span><span><span>three confidence metrics<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> for sales, profit margins and staffing indicate growth expectations over the next six months, according to Associated Builders and Contractors.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cEven amid economic turbulence, construction labor and material pricing, as well as inflation, have remained relatively predictable,\u201d said Gabrick. \u201cAs time has passed since the enactment of tariffs, our trade partners and vendors have been able to provide more assurance of the impacts. This is contrary to the challenges the industry faced during the pandemic, as pricing was extremely volatile.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/feds-rate-cut-boosts-existing-construction-projects-more-needed-to-spur-n\/807578\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Listen to the article 5 min This audio is auto-generated. Please let us know if you have feedback. Contractors &#8230; <a title=\"Fed\u2019s rate cut boosts existing construction projects, more needed to spur new builds\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/feds-rate-cut-boosts-existing-construction-projects-more-needed-to-spur-new-builds\/\" aria-label=\"Read more about Fed\u2019s rate cut boosts existing construction projects, more needed to spur new builds\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-33610","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/33610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=33610"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/33610\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=33610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=33610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=33610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}