2023 Construction Industry Trends for General Contractors

2022 presented some early road bumps for those in the construction industry, and as we venture into 2023, staying updated with the latest trends, challenges, and opportunities is crucial.

What’s going to happen in 2023 for general contractors? How is inflation affecting construction? Is the economy affecting construction starts?

In this article, we’ll look at a recent forecast from Dodge Data & Analytics 2023 Dodge Construction Outlook and outline where general contractors can find success even in tough times.

How Does 2023 Look For The Construction Industry?

Before we get into the nitty-gritty, let’s look at how things, in general, are looking for the California construction industry in 2023. Here’s the general outlook for specific industries you may be working in as a California general contractor.


Lower demand for brick-and-mortar retail stores and office construction, reduced hotel construction, and overbuilt warehouse construction is expected to cause a decline in commercial building construction by 3% to 921 million square feet in 2023 – with a value of $153 billion. However, data centers remain a bright spot as computing power needs increase.


The affordability of single-family homes has worsened due to rising interest rates and low inventory. 

Construction of single-family residences is expected to decrease by 6% to 891,000 units in 2023 with a value of $274 billion. 

Multifamily construction had a good year in 2022, but is expected to decrease by 9% to 723,000 units in 2023 with a value of $153 billion.


Infrastructure construction is obviously expected to grow, as states and municipalities start to receive increased funding from the Infrastructure Bill. 

Dodge Analytics forecasts a whopping 16% increase in infrastructure spending to $281 billion in 2023.

The Good News: Falling Material Prices

The good news – material prices fell in 2022, after peaking in 2021. If you were working as a contractor in California during 2021, you know how expensive construction materials were, due largely to the giant supply chain issues across the world. Luckily we’re getting some breathing room now.

Though prices aren’t exactly cheap, they are becoming more affordable overall, which is great news for us. Especially considering the bad news.

The Bad News: Fewer Project Starts in 2023

Now, the bad news: the construction industry is anticipated to stop growing in 2023. As you know, construction is expensive, and thanks to inflation and the looming possibility of recession, financing is going to be hard to come by this year.

According to the Dodge Data & Analytics’ 2023 Dodge Construction Outlook, project starts for 2023 are expected to level off to flat. In 2022, project starts were growing at a whopping 17%!

While this flattening of growth might initially seem concerning, it’s important for general contractors to view this as a natural progression towards a more sustainable pace. Projects will still be going up for bid, but they just will not be increasing in amount as we experienced in the last 15 years.

Emerging Trends and Opportunities for General Contractors in the 2023 Construction Industry

Despite the headwinds that face the construction industry in 2023, there are some ways to use this time to get ahead of the competition. Larger competitors in particular are vulnerable during periods of high interest rates, so you can take advantage by being agile.

Here are some trending opportunities to take advantage of in 2023.

  • Green and sustainable construction. 
    • As clients demand eco-friendly construction practices, general contractors prioritizing sustainable materials, energy-efficient systems, and waste reduction can distinguish themselves and cater to these demands.
  • Modular and offsite construction:
    • To tackle labor shortages, reduce waste, and improve efficiency, general contractors can adopt modular and offsite construction techniques. Prefabricated components and panelized construction methods bring significant benefits in terms of cost savings, project timelines, and quality control.
  • Construction technology
    • By adopting cutting-edge technologies such as building information modeling (BIM), 3D printing, drones, and virtual reality, general contractors can streamline their operations, offer innovative solutions to clients, and gain a competitive advantage.
  • Resilient construction
    • As climate change and natural disasters drive the need for resilient construction techniques, general contractors specializing in designing and building structures that can withstand environmental stressors can benefit from increased demand.
  • Skilled labor shortage
    • General contractors that invest in employee training and development programs will be better positioned to retain top talent and maintain productivity. Additionally, embracing innovative solutions such as automation and construction technology can address labor shortages and enhance competitiveness.
  • Urbanization and mixed-use development
    • General contractors specializing in efficient, mixed-use developments that blend residential, commercial, and public spaces can capitalize on the growing demand for integrated urban projects.
  • Public-private partnerships (PPPs)
    • General contractors that understand the intricacies of PPPs and can effectively navigate the complexities of these partnerships are well-positioned to secure lucrative contracts and expand their project portfolios.

Tips For General Contractors To Stay Ahead in 2023

To thrive in the evolving 2023 construction market, general contractors must be adaptable and willing to embrace change. 

By focusing on the following strategies, general contractors can maximize their potential for success in this dynamic industry.

    • Embrace innovation
      • Seek out innovative technologies and construction techniques to stay ahead of the curve and stand out among competitors. By integrating advanced tools, such as BIM, 3D printing, and drones, general contractors can streamline their processes and provide superior solutions to clients.
    • Focus on sustainability
      • Prioritizing sustainability in every aspect of a construction project, from the choice of materials to waste management practices, can help general contractors meet growing client demands and demonstrate a commitment to environmental responsibility.
  • Invest in development
    • By investing in ongoing training and development opportunities for yourself (and employees!) general contractors can build a skilled workforce capable of handling the industry’s challenges and capitalizing on emerging trends.
  • Diversify project portfolios
    • Expanding project portfolios to include a mix of residential, commercial, and infrastructure projects can provide general contractors with a stable revenue stream and insulate them from fluctuations in any one sector.
  • Cultivate strong relationships
    • Focusing your energy on building and maintaining strong relationships with clients, suppliers, and other stakeholders can lead to repeat business, referrals, and a solid reputation in the industry. Prioritizing communication and collaboration helps foster these relationships and promotes a positive business environment.

There are certainly some things lying in wait for general contractors in California in 2023 – both good and bad. There’s nothing to be afraid of – construction will always survive even the worst economic conditions – but being proactive and taking advantage of the available opportunities is key to staying on top.

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