Every market cycle teaches something valuable. The years 2022 through 2024 were no exception. During this period, the commercial construction industry experienced a remarkable surge, a dramatic correction, and a gradual stabilization. These years left behind lessons that remain relevant regardless of what the future holds.
The commercial sector performed significantly better than residential during this time–. Non-residential building construction spending saw double-digit increases–. However, this growth was not uniform across all sectors. Some markets thrived while others struggled. Understanding these dynamics provides timeless wisdom for anyone planning commercial construction projects.
This article explores the key lessons from this period. The insights that follow apply whether the market is booming, cooling, or somewhere in between.
Hosted by leading experts in global health, each episode of the Global Health Connect Podcast dives into critical discussions with thought leaders, innovators, and changemakers from around the world.
The Surge of 2022–2023
The period from 2022 through early 2023 represented a remarkable boom for commercial construction. Private nonresidential construction value grew 3.4% in 2022, reaching $588.20 billion-3. The most dramatic shift emerged in 2023, with a substantial 16.7% jump to $686.40 billion-3. Total construction put in place exceeded $2 trillion in 2023, marking a monumental year for the industry–.
Several forces drove this expansion. Federal funding and pent-up demand from the pandemic created a surge in activity–. Businesses adapted to new conditions, and remote work fueled the development of distribution and warehousing-3. Robust investment flowed into life sciences, data centers, and logistics infrastructure–. Additionally, public incentives for reshoring manufacturing contributed to increased construction activity-3.
However, much of this growth came with a hidden cost. Construction activity ramped up despite rate hikes, but much of the growth was driven by higher construction material costs rather than increased real output–. The producer price index for inputs to new nonresidential construction posted increases of 20% or more for 12 consecutive months-12.
The 2024 Slowdown
By 2024, the market had shifted significantly. Growth continued but at a much slower pace, with value rising just 1.1% to $694.00 billion-3. The post-pandemic boom was tapering off. Interest rates began to climb, and the market began softening-19.
Industrial construction experienced a particularly sharp decline. New construction starts fell by more than 40% between 2022 and 2023, with 341.9 million square feet breaking ground-6. This deceleration carried into 2024, resulting in a significant slowdown from previous quarters-6. The industrial construction boom that had driven massive warehouse and distribution center development was fading-6.
Manufacturing remained a bright spot. Manufacturing facilities accounted for more than 27% of all non-residential projects in 2024-1. However, many contractors remained cautious about the overall outlook-21.
Key Lessons for Any Market Cycle
The commercial construction market will always experience cycles. Booms and slowdowns are inevitable. However, the lessons from 2022–2024 apply regardless of where the market stands.
1. Diversification Protects Against Volatility
Not all sectors move together. Between 2022 and 2024, healthcare and education performed better than corporate office construction-1. Manufacturing, warehouses, and data centers led the way-1. Meanwhile, industrial construction experienced a dramatic decline.
Serving a diverse customer base allows contractors to keep their businesses balanced-1. Companies that rely on a single sector face greater risk when that sector slows. Diversification provides stability across market cycles.
2. Material Costs Are Highly Volatile
Material costs can change dramatically in a short period. From 2020 to 2024, nationwide total construction material cost escalation was approximately 40%–. Fabricated structural steel costs outpaced that at 50%–. Ready-mix concrete increased 11.2% in 2023 and 10.3% in 2022–.
However, prices do not always rise. The producer price index for construction inputs turned negative in 2023, with prices falling below the previous year’s levels-12. Lumber showed a 12-month decrease of 2.20% in late 2024-11.
The lesson is clear: material costs are unpredictable. Budgets must account for this volatility.
3. Labor Shortages Are Persistent
The construction industry has faced labor shortages for years. In 2022, the industry averaged more than 390,000 job openings per month, the highest level on record–. An average of 4.9% of construction positions were unfilled over the course of 2022, the highest level ever–. In 2023, the industry needed an estimated 546,000 more workers over the normal pace of hiring–.
The situation remained challenging in 2024. An average of 4.6% of construction positions remained unfilled-26. Contractors continued to struggle with significant labor shortages-21.
Labor availability affects everything. It strains productivity and pushes costs higher-36. The demographic trends at the heart of labor shortages are likely to continue-26.
4. Supply Chain Resilience Requires Proactive Planning
Supply chain disruptions eased over this period, but they did not disappear–. Lead times remained extremely long for major electrical components such as switchgear and transformers-12. Some contractors reported problems obtaining parts for elevators and air-handling equipment-12.
Even as conditions improved, the supply chain remained volatile–. The war in Ukraine and sanctions against Russia continued to disrupt production and shipping-36. A “just-in-case” approach to material procurement became necessary-19.
The lesson is that supply chain challenges will always exist. Early procurement of long-lead items is essential to avoid significant project delays–.
5. Cost Certainty Requires Realistic Budgeting
Construction costs are influenced by many factors. Interest rates, inflation, and tariffs all affect project budgets–. Higher construction delivery costs coupled with elevated interest rates can threaten project momentum–.
However, costs do not always move in one direction. The rate of cost increases moderated in 2024–. The market began showing more stability-36. Companies that planned for multiple scenarios were better positioned to adapt.
The lesson is that budgets must account for uncertainty. Contingency planning is essential.
Timeless Wisdom from a Volatile Period
The 2022–2024 commercial construction market taught lessons that will remain valuable for years. These insights apply regardless of the economic climate.
Success Requires Adaptability
Markets change. Companies that adapt thrive. The 2022 surge created opportunities for those prepared to scale up. The 2024 slowdown required careful cost management and strategic decision-making. Adaptability is the key to long-term success.
Relationships Matter
Strong relationships with suppliers, subcontractors, and clients provide stability during volatile periods. Long-term relationships may offer better pricing, priority access to materials, and more favorable terms. They also provide a foundation for weathering market changes.
Quality Endures
In any market cycle, quality matters. Projects built to high standards perform better over the long term. Clients remember quality work and return to contractors they trust. Quality is not just a goal—it is a competitive advantage.
Planning Prevents Problems
The 2022–2024 period demonstrated the importance of thorough pre-construction planning. Projects with realistic budgets, accurate schedules, and comprehensive risk assessments performed better. Planning prevents problems before they arise.
Looking Ahead
The commercial construction market will continue to evolve. New technologies, changing regulations, and shifting economic conditions will shape the future. However, the lessons from 2022–2024 provide a foundation for navigating whatever comes next.
Construction market growth will not always be steady. In 2024, the US construction industry grew by 4.5% in real terms–. In 2025, growth slowed sharply to just 1%–. The ability to adapt to these changes will determine long-term success.
Manufacturing, data centers, and infrastructure projects are expected to remain strong-1. Technology, such as AI, 3D modeling, and data analytics, is creating opportunities for efficiency and quality control-19. Companies that embrace innovation will be better positioned for future growth.
How CLOSW Construction Applies These Lessons
CLOSW Construction has navigated every market cycle with resilience and foresight. Our approach is built on the lessons learned from periods like 2022–2024.
Diversified Expertise
CLOSW Construction serves multiple sectors, including commercial, industrial, retail, and cold storage. This diversification provides stability across market cycles. When one sector slows, others often remain strong.
Proactive Material Planning
We monitor material markets closely and advise clients on optimal procurement timing. Strong supplier relationships provide advantages in pricing, priority access, and problem-solving.
Transparent Estimating
CLOSW Construction provides detailed, transparent cost estimates. We break down costs clearly and explain the factors driving price changes. Clients understand where their money is going and can make informed decisions.
Commitment to Quality
Quality is non-negotiable at CLOSW Construction. Every project, regardless of market conditions, meets our high standards. This commitment builds lasting client relationships and repeat business.
Comprehensive Pre-Construction Planning
We invest significant time in pre-construction planning. Feasibility studies, site analysis, and value engineering identify potential challenges early. This reduces change orders, delays, and cost overruns.
Ready to Start Your Commercial Construction Project?
Market conditions will always change. However, the right partner helps you navigate any environment. CLOSW Construction brings decades of experience, transparent communication, and unwavering commitment to quality.
Contact us today for a free, no-obligation consultation. Let us help you plan your commercial construction project for success in any market.
