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Higher construction costs slow non-data center commercial projects in 2026

A September Associated General Contractors of America survey found 55% of respondents delayed, canceled, or scaled back at least one non-data center project in the prior six months, often citing construction expense increases as the main driver.

Reported · Written up by our desk · Commercial

Rising construction costs are slowing the pipeline for non-data center commercial real estate development going into 2026, according to Commercial Observer, citing a September survey by the Associated General Contractors of America.

In that survey, 55% of respondents reported delaying, canceling, or scaling back at least one non-data center project over the previous six months, with one-third of companies pointing to increasing construction expenses as the main reason.

Construction input prices rose 1.2% month over month in August and were nearly 9% higher than August 2025, based on data from the U.S. Bureau of Labor Statistics, as reported by Commercial Observer.

The outlet also noted that some commercial real estate owners continue pushing projects forward, sometimes adjusting the size and scope, and it attributed that shift toward more flexible project plans to higher cost pressures.

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