MARKET WATCH | A snapshot of key geographies and client markets

Amid Volatility, Lowered Expectations for 2026

Shake it off

The AE industry shook off another year of economic and geopolitical volatility to post solid gains in 2025. While the seas may have been choppy, the industry navigated through significant headwinds posed by tariffs, stubborn input costs, staffing shortages, and relatively high interest rates. Whether the industry can match that performance in 2026, though, is questionable.

Cool with it

If forecasts are correct, construction activity is poised to cool slightly in the coming year. Following a 6.2% increase in the value of U.S. construction starts in 2025, Dodge Construction Network projects a slight 0.4% dip in 2026—with a 1.3% growth in nonresidential construction and a 1.7% rise in residential construction offset by a 4.4% fall in non-building construction. Dodge forecasts the health care market to outpace all others, with a 17.4% spike in the 2026 value of construction starts on top of a 13.6% increase last year. On the flip side, manufacturing is projected to plunge 24.0% in 2026 after a 5.2% drop in 2025.

Damp forecast

ConstructConnect projects nonresidential construction to fall 2.7% in 2026—after increasing 5.7% in 2025—and residential construction to rise 9.9% after an 8.8% dip last year. ConstructConnect forecasts data center starts to continue their acceleration with over $400 billion in projects on the boards. The Associated General Contractors (AGC) of Americas reports its members have “dampened expectations” for 2026. While bullish on the data center and power markets, AGC members have weak outlooks for lodging, private offices, and retail construction.

Housing rebound

As the massive federal Infrastructure Investment and Jobs Act (IIJA) enters its final year in 2026, the American Road & Transportation Builders Association predicts the total value of highway and bridge construction will climb 2.3%. The National Association of Home Builders (NAHB) forecasts a 7.5% gain in single-family housing starts in 2026 and a big redound in multi-family housing starts, up 10.5% in 2026 after three years of decline. Dodge forecasts a 1.9% slip in the value of single-family housing construction starts, but a 7.6% rise in multifamily housing starts in 2026.

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Study Assesses AI’s Impact on Architecture and Engineering

Advance warning

Ford CEO Jim Farley recently warned that “artificial intelligence is going to replace literally half of all white-collar workers in the U.S.” While that prediction might prove overly dire, there’s no doubt AI will significantly disrupt white-collar industries, including architecture and engineering. A study released last summer by Microsoft, which gauged the extent to which various occupations overlap with current large language model capabilities, found architecture and engineering jobs in the top half of affected professions.

Analyze this

The authors of the study, “Working with AI: Measuring the Applicability of Generative AI to Occupations,” analyzed 200,000 anonymized user conversations with the Microsoft Copilot generative AI system and cross-compared its performance with occupational data to assess how closely AI aligns with specific career tasks. Researchers found “the most common and successful AI-assisted work activities involve information work—the creation, processing, and communication of information.” Jobs such as interpreters, historians, passenger attendants, and sales representatives most closely align with AI’s current capabilities, while blue-collar jobs such as dredge operators, bridge and lock tenders, and water treatment system operators show the least alignment.

Role with it

The study evaluated 22 major occupation groups and found the greatest overlap with AI in computer, sales, and administrative support roles. Architecture and engineering—an occupation with a preponderance of information work—ranked seventh in AI applicability, just behind business and financial operations and six spots ahead of another professional service industry, the legal sector. Researchers found that 49% of an architect or engineer’s typical occupational tasks overlap with AI’s capabilities and that AI successfully completed 84% of those tasks to the users’ satisfaction. Researchers also found AI more closely aligned with the work of engineers than architects and surveyors.

High-stress conditions

The authors stressed that the study is not a forecast of which jobs will be replaced by AI. “Our measures of AI applicability indicate where AI is likely to change work, which is a part of the automation vs. augmentation question, but AI’s effects on employment and wages will depend on hard-to-predict business decisions,” they wrote. The researchers also cautioned that their study only reflects today’s large language models and that future automation could expand AI’s overlap with human work.

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Is Gen X’s Shot at the Top Already Over?

Marcia, Marcia, Marcia

After growing up on reruns of The Brady Bunch, Generation X might be forgiven if it feels like it’s suffering from “Jan Brady syndrome.” Much like the middle child from the classic TV sitcom, the generation sandwiched between the baby boomers and millennials could be excused if it feels overshadowed. With boomers winning eight of the last nine presidential elections, none of the 65 million Americans born between 1965 and 1980 have occupied the White House—and possibly never will. And as they are entering into their management-age prime, Gen Xers just might be seeing their opportunities for the corner office fading as well.

Gray matter

Like a crown prince patiently waiting to inherit the throne from a long-reigning monarch, many Gen Xers bided their time to ascend to the C-suite once baby boomers retired—except many never did. With the aftermath of the Great Recession and the COVID pandemic requiring experienced hands at the helm, boomer CEOs remained in charge past typical retirement ages. Charting the graying of the corner office, the Wall Street Journal reported that more than 40% of Russell 3000 chief executives are 60 years old and older, up from 35% in 2017. While fifty-somethings held 51% of CEO seats in 2017, that percentage has fallen to 43%.

Meeting the moment

While boomers had at least three decades as the largest generational group in management positions, Gen X barely had 10 years ruling the managerial roost, according to a Glassdoor analysis. In 2025, millennials for the first time composed a larger share of the managerial workforce than Gen Xers—with millennials accounting for 39% and Gen Xers for 37% of managers. And don’t look now, but Gen Z is coming. Glassdoor reports that the share of managers from Gen Z surpassed 10% for the first time in April 2025. Much as boomers’ grizzled experience was in high demand during recent turbulent times, companies might find the technical aptitude of millennials and Gen Zers, the first digital natives to enter the workplace, more attractive options to meet the challenges of a future increasingly defined by technology and artificial intelligence.

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