BEX Updates Construction Sector Projections in Annual Midyear Update

Growth in the Arizona Construction industry is broad-based, but larger players are having an easier time securing funding and bringing their projects online than their smaller counterparts.

This was one of the conclusions presented at the June 24 BEX 2026 Midyear Update on Arizona Construction. This year’s event was held at the Phoenix Art Museum and presented to more than 225 registered attendees.

BEX Founder and President Rebekah Morris, Senior Market Researcher Andrea Howard and Market Researcher Jaden Schneider all shared their individual findings and conclusions on the various trends affecting construction across the nine sectors BEX tracks.

Economic Factors

Following an introduction by General Manager Bobby Raether, Morris kicked off the event, as she often does, with a run-through of the various macroeconomic factors impacting the Arizona Architecture/Engineering/Construction industry.

While Arizona is still experiencing population growth, the process continues at a moderate pace, with 2025 showing a growth rate of 1.27%.

Statewide employment, however, has increased solidly over time, despite fluctuations over the last couple of years. The latest data shows a total of 3.284 million jobs, an increase of 22.58% over the previous peak level of 2007.

Construction employment, however, still lags behind its 2006 peak. In 2006, there were 240,300 construction jobs in the state. The most recent employment data shows a current construction workforce of 225,600, still 6% less than the earlier high.

Following a healthy surge to regain ground after the pandemic, construction employment has slowed, going flat-to-slightly-negative in 2024, increasing 3.4% in 2025 and sitting at 0.94% year-to-date.

Statewide construction revenues and activity have also moderated but still remain healthy. Using taxable sales data to chart construction revenue, 2025 showed a slight decline, reaching $25.9B after ending 2024 at $26.7B.

“We do not agree with that,” Morris said. “Our data set is a little bit different… When we look at our own data, we see a market that’s growing.”

BEX’s internal data, which includes project valuations not impacted by various tax incentives and carve-outs, shows activity at $31.9B.

Transitioning to market composition, Public projects make up 22% of Arizona construction, while Housing accounts for 25%, and Private development covers 53%. Long gone are the days when the pie was generally cut into thirds.

Industrial makes up the largest portion of work, by far, followed by Multifamily. Morris referred to the two sectors as “an 800-pound gorilla and a 500-pound gorilla.”

While the specific details of issues affecting the Construction have shifted over the years, the core items have remained somewhat consistent over time and include:

The macro economy, which now includes fuel costs impacted by the war with Iran;
Power requirements outpacing available supply;
The expansion of organized project resistance;
Long lead times for components, including switchgear and HVAC, and
Slow plan review and permitting at the local level.

Morris pointed out the slow review time issue is exacerbated, according to municipalities, by a marked decrease in the quality of submittals from development teams, which requires more rounds of meetings and change discussions before any progress is made.

Individual Market Sectors

After the trend introduction, Morris and the team tackled performance so far this year since the BEX Construction Activity Forecast Event. (AZBEX; Feb. 6)

As has become the norm with these writeups, we will list some of the key points delivered for each sector but withhold most of the individual analyses to ensure maximum value for those who attended in person.

K-12

Size: K-12 projects make up around 1.7% of the market.

2025 Volume: $542.6M.

2026 Projected Volume: $773.5M.