Chicago Experiences Decline in Construction Starts Across Sectors

News Summary

The construction industry in Chicago has faced a sharp decline, with overall construction starts decreasing by 10.2%. Notably, both nonresidential and residential sectors have shown significant decreases, although nonbuilding construction saw growth. The downturn reflects broader economic changes and a shift in project completions, with nonresidential buildings plummeting by 30.1% and residential starts falling by 3.1%. While utilities projects surged, the overall construction landscape appears to be cooling, indicating regional and sector-specific variations.

Chicago Sees Sharp Decline in Construction Starts in July 2025 Across Multiple Sectors

The construction industry in Chicago experienced a notable downturn in July 2025, with both nonresidential and residential projects showing significant decreases, although certain nonbuilding categories saw growth. Overall, construction activity slowed, reflecting broader economic shifts and project completion trends.

Total Construction Starts Decline

In July 2025, the total value of new construction starts in Chicago decreased by 10.2%, reaching a seasonally adjusted annual rate of approximately $1.19 trillion. This marks a reversal from prior gains observed earlier in the year, highlighting a cooling in construction activity across various sectors.

Sector-Specific Performance

Nonresidential Building Starts Plummet

Construction of nonresidential buildings registered a drastic decline of 30.1% during July, resulting in an annual rate of about $443 billion. The decline affected multiple categories within this sector, including institutional and manufacturing projects.

• Notable decreases were seen in manufacturing projects, which shrank by 84.7%.
• Institutional projects decreased by 4.6%, with education construction down by 13.3%.
• Commercial construction started to normalize, reducing by 8.5%, with office projects declining significantly by 33.1%-a trend indicating stabilization at lower levels set earlier in 2024.

Major nonresidential projects that began in July include the UU West Valley Eccles Health Campus in Utah valued at $855 million, the Mercy Hospital Campus in Missouri at $650 million, and the Meta Data Center Campus in Ohio worth $550 million.

Nonbuilding Construction Sees Growth

While other sectors slowed, nonbuilding construction experienced a boost of 20.4%, reaching an annual rate of approximately $395 billion. This growth was driven primarily by utilities and public works projects.

• Utilities projects surged by 127.2% month-over-month.
• Miscellaneous nonbuilding projects increased by 50.0%.
• Public works like highways fell by 2.5%, but environmental public works dropped significantly by 17.7%.

Significant projects initiated in this category included the Empire Wind Offshore Wind Energy Project in New York, the A’s Ballpark in Nevada, and a power transmission line in Oregon.

Residential Construction Shows Mixed Results

Residential starts fell slightly by 3.1% in July, reaching an annual rate of approximately $356 billion. Within residential projects, single-family homes experienced a modest increase of 1.2%, while multifamily starts declined by 9.5%.

• Year-to-date (YTD) residential construction is down by 4.4%.
• Single-family residential starts are down by 10.1%, but multifamily projects increased by 8.3%.

In terms of major projects started in July, the largest multifamily developments included the Rangel Houses Renovation in New York valued at $552 million, and a new apartment tower, the 20 Long Slip Apartment in Jersey City, costing $365 million.

Regional Variations in Construction Starts

Construction activity varied across regions. The Northeast experienced an increase in starts, while declines were observed in the Midwest, West, South Central, and South Atlantic regions. These regional changes reflect differing economic conditions and project pipelines nationwide.

Year-Over-Year Trends and Summary

Over the past 12 months ending in July 2025, total construction starts have grown by 4.1% compared to the previous year. The nonresidential sector led this growth with a 4.6% increase, while residential starts remained relatively flat, decreasing by 0.7%. Nonbuilding projects showed the most notable annual rise, up by 9.3%.

Looking at the year-to-date figures, nonresidential starts are up by 4.3% compared to the same period last year, driven by a 5.5% increase in commercial and industrial projects, and a 3.0% rise in institutional projects.

Expert Analysis and Outlook

While precise projections are uncertain, experts note that the decline in July may offset earlier gains made in the spring and early summer. Overall, the construction industry remains relatively stable with modest growth over the past year, although some sectors, especially manufacturing and institutional projects, are experiencing significant decreases, indicating shifts in investment and development priorities.

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