Despite of material and labor short-ages and higher interest rates, the Indiana construction industry in 2024 remained robust, and most observers are optimistic for 2025.
Contributing factors include Indiana’s big tech boom and federal incentive programs including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the Creating Helpful Incentives to Produce Semi-conductors (CHIPS) Act, according to Deloitte’s 2024 Engineering and Construction Industry Outlook. In addition, incentives from local entities like the Indiana Economic Development Corporation (IEDC) and local economic development teams are also boosting the sector.
IMPRESSIVE RESILIENCE
The construction high tide is lifting all boats: everything from single-family buildings to municipal, industrial, and commercial projects, are getting a boost.
The U.S. Census Bureau’s most recent data indicates a significant rebound in building permits issued in Indiana. In June 2024, 1,921 single-family permits were issued, a 16% increase from the previous month and a 12% increase compared to June 2023. Overall, the industry has seen a strong 23% growth in permit numbers during the first half of 2024 compared to the same period last year, according to the Indiana Builders Association (IBA).
Organizations like IEDC, local economic development teams, and public officials are helping to spur growth in the industrial market, said Tom Gehrlich, director of operations, Shook Construction. “We anticipate these activities and efforts will cascade to other market sectors as this will chal-lenge current infrastructure capacities, housing, and healthcare networks.”
Arcadis, which focuses on municipal, industrial, and commercial-focused projects, has seen growth in all these areas, said Amy Smitley, vice president and area leader for Arcadis’s water division. Arcadis is also seeing a trend in updating automotive facilities in Indiana, with government incentives playing a big role, Smitley added. “Some of these facilities are getting retrofitted to allow for EV production, and many older automotive plants are having aging infrastructure issues, so we are providing assessments on wastewater and stormwater systems.”
Public investment has led to large-scale public projects, such as the double-track project for the South Shore rail line, which spurred private development around train stations in key cities.
“Public and institutional sectors are leading the market, leading to subsequent growth in the commercial sec-tor,” said Jeffery Berglund, president for Berglund Construction.
The commercial construction market in NW Indiana has continued to be quite robust in 2024, which we anticipate continuing into 2025”, said Nick Larson, vice president of Larson-Danielson Construction.
HOUSING GETS HOT
The May 2024 figures for housing starts in the Midwest region, east north central division (Illinois, Indiana, Michigan, Ohio, and Wisconsin) reported 18,250 new privately owned ousing units authorized, with 11,835 of these single-family units, according to U.S. Census Bureau statistics.
Single-family building permits are up 26% year over year for the first five months of 2024, said Kenny Rein-brecht, president, Indiana Builders Association. “The housing market continues to evolve, and consumers still want to become homeowners, which is good for the long-term growth of our state. However, it’s crucial that we bring product to the market that is both desirable and affordable for consumers,” Reinbrecht said.
MATERIAL PRICING IS UP
A big drawback to all this good news is the pricing and availability of building material — a problem that was especially pernicious during the pandemic. Construction prices rose 40% on average during COVID, which led to projects stalling in the post-pandemic world due to budget problems, Berglund said.
Today, international factors like the war in Ukraine and the Middle East, as well as logistic delays related to the Francis Scott Key Bridge in Baltimore, affected pricing for structural steel, framing lumber, concrete block, conduit, copper electric wire, and fiberglass insulation.
“We continue to see products with extremely long lead times as well as an upward trend in costs because of the constant rise in inflation and elevated interest rates,” said Gehrlich of Shook. “Our preconstruction team constantly monitors these items closely and provides weekly updates to our operations teams so we can communicate those learnings to our designer, engineer, and client partners in a collaborative effort.” However, Gordian’s Q2 2024 Quarterly Construction Cost Insights Report indicates that construction materials prices overall are stabilizing as manufacturers adopt near-shoring and reshoring strategies.
“In general, the issues with material availability and sharp price increases we saw arise during the pandemic have assuaged,” said Berglund. “Pricing has not gone down, but the spikes have ceased and returned to a predictable rate of small increases annually.”
GROWING TECHNOLOGY
Emerging technology such as auton-omous drones, LiDAR (Light Detection and Ranging), Building Information Modeling (BIM) and of course, artificial intelligence (AI) is adding precision and value in the design and engineering phase. “The integration of autonomous drones and UAVs for aerial surveys is transforming how topographic data is collected, offering faster and sometimes more complete results,” said Don Williams, Jr., P.S., Division Manager, DLZ.
“AI can enhance BIM and GIS by making them more intelligent, stream-lining integration between datasets, flagging inconsistencies, and even recommending design changes to meet user defined criteria,” stated Williams.
To boil it all down, we asked our Pro Voices, “How would you describe Indiana’s construction market in 2024, and what are your predictions for next year?” Here are their answers:
DON WILLIAMS, JR., P.S.
DIVISION MANAGER | DLZ CORPORATION
In 2024, Indiana's construction market has been dynamic, with demand across multiple sectors. Infrastructure projects have been significant drivers, supported by federal funding and state initiatives. There has also been a rise in industrial developments like commercial warehousing and data centers, especially along the I-65 corridor. Looking ahead to 2025, I would expect this trend to continue, with steady growth in both infra-structure and industrial developments.
GREG MONBERG
DIRECTOR OF ARCHITECTURE | WIGHTMAN
The construction market in Indiana has shown impressive resilience and growth in 2024, bolstered by significant governmental investments.” Niche areas like data centers and manufacturing facilities are booming, reflecting a shift towards high-tech and industrial advancements. We anticipate a slight slowdown in 2025 due to economic adjustments, the momentum gained from current infrastructure investments and real estate developments promises sustained growth.
TOM GEHRLICK
DIRECTOR OF OPERATIONS | SHOOK CONSTRUCTION
Shook is seeing a steady volume of activity in construction in Indiana and anticipates this to continue into 2025. Several market sec-tors continue to escalate in activity at a solid pace. However, the industry continues to be challenged by the need for people at a variety of skilled levels, from craft personnel to senior project leadership.
AMY SMITLEY
VICE PRESIDENT AND AREA LEADER | ARCADIS’S WATER DIVISION
The construction market is hot with fuel from the technology sector with the demand for data centers. Funding, incentives and education are also driving decision making in the market. We see a competitive market, with contractors being more selective about which projects they will bid. Contractors also are favoring alternative project delivery methods over traditional design-bid-build, and we anticipate similar competition mov-ing into next year.
TONY PANGERE
PRESIDENT | THE PANGERE CORPORATION
The commercial market is experiencing strong growth in several sectors, and we anticipate this to continue for several years, particularly in healthcare, education, data centers, logistics, and warehousing. We are less optimistic for growth in the industrial market as steel and manufacturing companies appear to be slowing; however, the market should remain relatively stable over the next year. The availability of skilled labor has improved somewhat over the past year, but seasonal factors and large-scale projects still lead to periodic shortages.
JOSEF MICHUDA
PRESIDENT | MICHUDA CONSTRUCTION
2024 was fueled and propelled by the approval of READI Grants for the region. The state and regional economic development organizations have done a tremendous job in securing investments, thus promoting growth in all markets. I predict 2025 will bring much of the same for Indiana as it continues to attract new business and become a hub in the Midwest.
