{"id":33668,"date":"2025-12-18T23:06:12","date_gmt":"2025-12-19T07:06:12","guid":{"rendered":"https:\/\/essential.construction\/news\/minneapolis-fed-survey-nonresidential-builders-face-tighter-pipelines-rising-costs\/"},"modified":"2025-12-18T23:06:12","modified_gmt":"2025-12-19T07:06:12","slug":"minneapolis-fed-survey-nonresidential-builders-face-tighter-pipelines-rising-costs","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/minneapolis-fed-survey-nonresidential-builders-face-tighter-pipelines-rising-costs\/","title":{"rendered":"Minneapolis Fed survey: Nonresidential builders face tighter pipelines, rising costs"},"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\/808302\/2025-12-18_15.32.05\/minneapolis-fed-nonresidential-builder-survey-2025.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>Construction activity across the Federal Reserve\u2019s Ninth District declined slightly over the past six months, with nearly half of the firms surveyed reporting lower activity compared with the same period in 2024, according to results from the <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.minneapolisfed.org\/article\/2025\/uncertainty-and-increased-competition-impact-construction-firms\" target=\"_blank\"><span><span><span><span><span><span><span><span>Minneapolis Federal Reserve\u2019s fall construction sector survey<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>.<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The results, which were presented during a Dec. 12 webinar, showed that rising input costs continue to pressure margins, with 80% of firms reporting higher costs, while only 63% said they raised prices charged to clients. The result has been increasing competition for nonresidential work, Federal Reserve Bank of Minneapolis Regional Outreach Director Erick Garcia Luna said during the webinar.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Despite softer activity, labor demand remains strong, with nearly half of respondents actively trying to hire, driven by retirements, specialized labor shortages and continued demand in select nonresidential segments such as industrial, infrastructure and healthcare.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Construction firms in the region are facing a more competitive and uncertain environment as activity softens, costs remain high and project pipelines shrink, according to the survey. Conducted twice a year, the survey polled more than 260 construction firms across Montana, North Dakota, South Dakota, Minnesota, northern Wisconsin and Michigan\u2019s Upper Peninsula.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Garcia Luna noted that construction activity declined slightly compared with the same period last year, with nearly 50% of respondents reporting lower activity, while about one-third reported growth, highlighting uneven conditions across the district.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Residential construction continues to face the strongest challenges. Nonresidential segments have shown greater resilience, but that comes with a growing caution.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWhen you isolate nonresidential construction, particularly industrial and infrastructure, the picture looks a little better,\u201d Garcia Luna said. \u201cThere are still pockets of projects that are keeping firms busy, especially in industrial construction.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>However, he noted that may just be temporary as nonresidential contractors also reported shrinking backlogs and fewer requests for proposals, signaling a slowdown in future work.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cUncertainty is keeping some project owners on the sidelines,\u201d Garcia Luna said. \u201cPeople are still nervous to invest. That wait-and-see attitude is showing up in diminishing backlogs and fewer projects entering the pipeline, and firms expect that to continue into the new year.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><strong><span><span>Cost pressures and competition intensify<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>Another big takeaway from the webinar was that cost pressures remain widespread.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThat\u2019s impacting how firms compete for projects,\u201d Garcia Luna said. \u201cSmaller companies, in particular, are losing work to better-capitalized firms that can absorb higher costs or accept tighter margins.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The confusion surrounding tariffs has added another layer of risk for nonresidential contractors, complicating both pricing and bidding decisions.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>While materials such as aluminum remain a concern, Garcia Luna noted that contractors also pointed to increasing costs tied to heavy equipment and machinery components, especially in industrial and infrastructure construction.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe often think about tariffs in terms of materials,\u201d he said. \u201cBut components for machinery, repairs and specialized equipment are also becoming more expensive, and that\u2019s contributing to uncertainty.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><strong><span><span>Data centers and healthcare offer opportunity<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>Data center construction continues to provide some support in the region, though Garcia Luna cautioned against overreliance on the sector.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThere are only a handful of active data center projects in the district,\u201d he said. \u201cThe concern we hear is that these projects are absorbing skilled labor, particularly electricians and pipefitters, which can create shortages for other types of nonresidential work.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Beyond data centers, healthcare construction emerged as one of the most consistent sources of opportunity in the nonresidential sector, with steady permitting activity and hospital investment across parts of Minnesota and the Dakotas.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cHealthcare is where we\u2019re seeing sustained project flow,\u201d he said. \u201cOutside of data centers and healthcare, it\u2019s harder to identify other segments generating that same level of consistent work.\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><strong><span><span>Outlook remains cautious<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>Even with a reported slowdown, the demand for labor has continued climbing.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cReplacing retiring workers is a challenge,\u201d Garcia Luna said. \u201cIn many cases, the skills needed just aren\u2019t easy to find.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Looking ahead to 2026, contractors\u2019 outlook remains cautious. While expectations vary by sector, uncertainty continues to shape decision-making.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe\u2019re hearing many of the same concerns we heard earlier in the year,\u201d Garcia Luna said. \u201cThat persistence matters. It suggests uncertainty isn\u2019t going away quickly, and firms are planning accordingly.\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\/minneapolis-fed-nonresidential-builder-survey-2025\/808302\/\" 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. 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