Mixed market conditions demand heightened business savvy

From sluggish growth projections to the data center boom to debates about the impacts of tariffs, interest rates and labor shortages, the construction industry is heading into a complex market in 2026.

So, what are some of the biggest market forces that BC&E members expect to contend with this year? And what best business practices are they employing to thrive in the year ahead?

“The market is stable with a strong demand for infrastructure, data centers, healthcare and public works,” Mark Rich, President of Baltimore Fabrication said. “However, owners are being more selective. Value engineering comes into play, which makes award cycles a little longer.”

Many clients, however, are shifting their contracting practices to contend with market conditions, including the “stabilized” but historically high price for steel and uncertainties around securing power for data centers and other large projects.

“There has been a noticeable improvement in early collaboration,” Rich said. “Engaging us sooner contributes to better budgeting, enhanced constructability and more efficient sequencing, ultimately strengthening the project’s overall outcome.”

Material prices, labor shortages and supply chain challenges have compressed margins, so Baltimore Fabrication has focused its pursuit of new contracts to increasingly prioritize “alignment over volume,” Rich said. “The wrong type of work can spread you too thin.”

The company, he added, is focusing its bidding practices on “risk factors, scope and schedule, constructability, the type of project and is the job site open and accessible. If it is constrained or has obstacles, that impacts the crane price. Also, when we are bidding a large steel project, we are getting price protection from the mills.”

The region’s construction market has been “steady but different,” said John Prusak, General Manager – Maryland, Delaware, DC/Northern Virginia & Harrisburg, PA Markets at Johnson Controls.

Clients are moving forward with significant numbers of large and small projects, but few mid-budget jobs.

Furthermore, “there is pressure on budgets for projects from whatever hangovers there are from tariffs and obviously by the cost of labor,” he said.

Mindful of the challenges posed by labor costs and shortages, Johnson Controls is “constantly recruiting talent. We are recruiting through the community college programs, various trade schools and by being active in higher ed and high school environments,” Prusak said.

The company is looking to address labor needs through “deployment of AI technology,” he said. “We have more intelligent equipment and smart devices, so maybe we can provide remote services to connected equipment. If we can diagnose and triage an issue remotely and not have to roll a truck, that can help manage the labor pool challenge and deliver cost savings for the customer.”

Gray & Son has also been navigating mixed market conditions. The data center, healthcare and public school construction sectors have been solid, but road and residential construction have been “very weak, particularly in the Baltimore metro area,” said Rick Scheetz, CEO and President of Gray & Son.

“Pricing for materials and equipment has leveled out. This has helped with pricing stability and margins,” he said. “As interest rates ease, we should see more activity in mixed-use and residential projects.”

The company has a good backlog of work and a “consistent flow of jobs to bid,” Scheetz said. “We are stretching our market area outside of Maryland and that is paying good dividends.”

To thrive within those conditions, Gray & Son is dutifully following “standard procedures and consistent processes,” he said. “We are metric driven. Understanding the bid and making sure we know where we are daily versus the bid has driven extraordinary success.”

For Rosendin Electric, the market in Maryland and surrounding states is currently “very healthy,” with ample construction projects in healthcare and data centers, and equipment modernization projects in various sectors, according to Dimitri Kontos, Division Manager at Rosendin Electric.

He anticipates work opportunities will increase further in the coming years, partly due to the implementation of NFPA 70B — a regulation by the National Fire Protection Association that mandates Electrical Maintenance Programs (EMPs) in commercial, industrial and large residential facilities.

To keep up with that demand and serve clients well, Rosendin follows two key business practices.

To guard against pricing issues, “we keep very strong relationships with a lot of vendors. We check in with them weekly or bi-weekly to see what prices are fluctuating and make sure they know what work we have coming up so they can notify us when they feel prices are about to change,” Kontos said.

To fully serve clients, Rosendin conducts “quarterly reviews with some clients to see what their portfolio needs look like,” he said.

Rosendin has also switched from a 12-month to a rolling, 36-month planning cycle to match the long-term planning processes of many clients. “If we have that long view of upcoming projects, we can also partner with union halls to help organize people.”

Thank you to the BC&E member companies that contributed to this story: Baltimore Fabrication, Gray & Son, Johnson Controls and Rosendin Electric.