As 2025 kicks off, Mitsubishi HC Capital America, a non-bank, non-captive finance provider in North America, is identifying five trends that are likely to play a significant role in shaping the construction industry in 2025.
“Economic growth remains at the forefront of industry discussions,” Chris Johnson, senior vice president of construction lending at Mitsubishi HC Capital America, said. “However, this year may mark a turning point. As markets adjust to evolving conditions and technological advancements, cautious optimism is taking hold.”
Digital Transformation: Technology is revolutionizing U.S. construction processes. The adoption of Building Information Modeling (BIM) is transforming project planning and execution by utilizing digital models to streamline workflows and minimize errors. Artificial intelligence (AI) and machine learning are enhancing the accuracy of project scheduling and cost estimation, enabling better decision-making and resource allocation. Meanwhile, drones and robotics are playing a pivotal role in improving safety and efficiency, particularly in surveying and on-site construction tasks, ushering in a new era of innovation and productivity.
Non-residential Construction to Increase to Support Data Storage and Processing: Data center construction is expected to ramp up considerably in 2025 and beyond. Late last year, Meta announced it would invest $5 billion in rural Louisiana to construct a new data center. According to the U.S. Census Bureau, data centers made up 3% of the total non-residential commercial construction. This trend will continue as AI and other technology needs increase.
Bonus Depreciation: Many tax breaks from the Tax Cuts and Jobs Act (TCJA) are being reduced or will expire by the end of 2025. Bonus depreciation allows businesses to accelerate the tax deduction for purchasing equipment and machinery. However, starting in 2025, the deduction will decrease to 40%, drop further to 20% in 2026 and phase out entirely by 2027.
Expansion and Diversification: Expanding geographically or diversifying can require significant capital and equipment. Consideration of current cash flow models and profitability to determine financing options like business loans, lines of credit or investor partnerships to fund expansion without overburdening current operations. Certain regions are experiencing a decline in large-scale projects in specialties like heavy highway construction. Instead of facing challenges in recruiting workers willing to travel out of state, firms can consider acquiring established companies in growth markets across other regions.
Carbon Footprint and Green Certifications: Many construction companies are pursuing sustainability goals or green certifications (e.g., LEED), so opting for low-emission or energy-efficient equipment can aid in meeting these targets. Net-zero construction is becoming the industry standard.
According to the Equipment Leasing and Finance Association’s recent Horizons Report, end-users in the construction industry were the most likely to use financing in 2024, given the need for owners to improve cash flow and ensure readiness for future growth. Anticipated growth is projected for 2025.
“In 2025, we will continue to help customers optimize cash flow, expand their capabilities, and position themselves for growth in an evolving industry,” Drew Carson, senior vice president of sales for Sunstate Equipment, said. “As our customers face rising costs and increasing demand for flexibility, Sunstate Equipment is committed to expanding not only our footprint in the rental space, equipment sales, industrial and trench, but also to making the technological advances our customers will require to maximize efficiency and ensure they are informed to make the best, most cost-effective decisions.”
“Demand for equipment and rentals is rising as businesses prioritize cash flow and project scalability,” Johnson said. “As we adapt to the latest market needs, we are committed to offering solutions that empower our customers to remain efficient and competitive in an evolving economy.”
