Firms say the AEC industry across the Midwest is being driven by a combination of public infrastructure investment, private-sector expansion and evolving project delivery methods. But challenges such as rising costs and higher interest rates persist, prompting firms to adapt with new strategies to maintain growth and meet demand.

Indianapolis-based American Structurepoint had a good year across its operations, highlighting both the resilience of the public infrastructure sector and the increasing complexity of modern construction and design work, says Steve Davidson, chief strategy officer.

“Continued investment in infrastructure from states and the federal government has created consistent demand for our design services,” he says. “We have also seen significant growth in the private sector books of our business.”

Discussing the Milwaukee region, Scott Lindvall, COO at HGA, which was founded in 1953 and has offices in Milwaukee and Minneapolis, agrees that the AEC market “remains resilient. But there’s ongoing tension around financing and projects.”

One of American Structurepoint’s public infrastructure projects is the Ohio River Crossing (ORX) Bridge Approach project, which the firm calls a critical component of improving regional mobility and long-term economic connectivity in southern Indiana. Key components of this nearly $1.4-billion design-build project include complex coordination, phased delivery and careful consideration of constructibility and community impacts, the firm says.

Another of the firm’s projects is the Interstate-90 rehabilitation in Cuyahoga County, Ohio. In addition to several miles of pavement replacement, the firm developed what Davidson says “is an innovative solution to design a new drainage system that fits within the original interstate footprint. This design minimizes impact to the heavily traveled corridor and reduces flooding risk.”

While innovation remains essential and the public infrastructure sector is strong, at the same time, private developers are continuing to invest in residential, industrial and technology-related developments, further reinforcing Midwest stability, Davidson says.

“Science and technology projects are an increasingly important market for our architecture group, and we continue to see strong interest in multifamily projects,” Davidson adds. “Site development and industrial projects continue to be in demand as the public and private sectors continue to make investments in economic development.”

RS&H, a national architecture and engineering firm with offices in Chicago and St. Louis, also says its pipeline is being fueled by a mix of both public- and private-sector opportunities.

“Transportation remains a steady sector, though the timing of program delivery has been influenced by funding flow and policy direction,” says Bob Jones, vice president and project controls group national director for RS&H. “To offset this variability, we’ve seen strong performance in our federal and aviation markets as well as growth in the private vertical sector, bolstered by long-standing client relationships. Additionally, the defense market has emerged as a significant area of opportunity, with increased funding and demand creating new avenues for expansion.”

“Institutional work is also a key driver in the higher education, health care and research facility sectors, reflecting owner confidence in long-term regional growth,” adds Chris Hopper, executive vice president and general manager for Skanska USA Building, discussing the Cincinnati area.

Lindvall also highlights infrastructure as a significant area of growth, adding that energy—especially for data centers—is becoming an increasingly important part of the equation. This comes even as communities across the Midwest push back against proposed data center projects, raising concerns about where facilities will be located and how they will be powered.

“The region is seeing growing demand for data centers and the power and cooling infrastructure that supports them, driven by AI and expanding digital activity,” Lindvall says. “Even without large-scale facilities locally, Wisconsin firms are contributing expertise across the supply chain, and debates over siting are likely to intensify in the coming years

American Structurepoint is providing survey, environmental and road design services for a pavement replacement project along Interstate 90 in Cleveland.
Photo courtesy of American Structurepoint

Sustainability Goals

Milwaukee County has a plan to reduce carbon emissions from county operations and adapt to climate change, Lindvall says.

The goal of the county’s Climate Action 2050 plan is to achieve carbon neutrality, or zero net carbon emissions, in county operations no later than 2050. It is also geared toward improving the resiliency of county operations and helping the county in its bid to become the healthiest county in Wisconsin.

HGA is providing energy consulting services to Milwaukee County in its project to replace the nearly 100-year-old Milwaukee County Safety Building.

“This follows a trend that others in the community and across the country have prioritized: investment in infrastructure improvement and addressing years of deferred maintenance,” Lindvall says. “Many owners are facing increased energy costs and aging steam equipment and are considering moving away from steam as a primary heating source and converting to low temperature hot water.”

He says such conversions would allow for lower carbon emissions and the ability to electrify some heating/cooling systems using heat recovery chillers or heat pumps. These systems can be paired with thermal energy storage, geothermal and even wastewater heat exchange to further increase efficiency.

“There are many variables to consider when selecting systems, including distribution, which often can be difficult to convert or replace depending on the routing and condition,” Lindvall notes.

“To avoid waste, owners are reusing existing buildings which requires modifications to the engineering systems or taking advantage of aggregating HVAC loads with central plants,” he says.

Lindvall notes that demand for sustainable construction is robust, and Milwaukee is taking a vital role.

“Innovation in sustainable construction remains strong, with high-rise mass timber buildings positioning Milwaukee as a leader with this technology,” he says.

 

Alternative Delivery

Despite demand, the industry overall continues to grapple with rising costs for materials, labor and equipment. Inflationary pressures have forced firms to rethink how projects are planned and executed. In response, firms are adopting alternative delivery methods that emphasize early collaboration and proactive decision-making.

“We continue to enhance our innovative alternative delivery methods as a way to address rising costs,” Davidson says. “Early contractor involvement and proactive cost estimating allow us to evaluate materials, phasing and constructibility decisions during design, rather than reacting later in the process. By identifying risks early and exploring cost-effective alternatives, we help clients maintain budget control while still delivering resilient, high-quality solutions.”

RS&H is taking a similar approach by integrating cost considerations early in the design process.

“By leveraging contractor-level estimating and real-time pricing insights, we help clients align scope and budget before finalizing plans, reducing the risk of surprises later,” Jones says. “Transparency and collaboration are key. Early discussions with clients allow us to explore alternatives—such as adjusting materials, sequencing or delivery methods—to mitigate exposure to volatile markets.”

RS&H adds that it incorporates escalation and risk factors into its cost models, ensuring decisions are informed by market conditions and allowing it to deliver value while navigating a challenging cost environment.

Early collaboration and cost transparency are also essential for coping with high interest rates, the firms agree.

“By factoring increased carrying charges into our independent cost estimate contracts and integrating contractor-level estimating into the design process, we help clients make informed decisions that align with their financial goals,” says James Shaw, vice president and division leader of infrastructure for RS&H. “This proactive approach minimizes risk and ensures projects remain viable in a volatile economic climate.”

Lindvall notes that interest rates continue to be a subject of concern.

“Day-to-day, the most prominent topic among developers, designers and contractors is the effect of high—albeit slightly easing—interest rates and elevated construction costs,” Lindvall says.

Those concerns in Milwaukee have had an impact on “lenders who are still taking a careful approach, which has resulted in some projects pausing or being delayed, with a few previously approved developments now sitting idle as teams reevaluate next steps,” he says.

Looking to the future, Lindvall says there is cautious optimism for a thriving AEC industry in 2026 if economic conditions improve, but many variables remain in play.

 

Strong Fundamentals

Overall, the construction industry outlook remains positive as the Midwest region continues to benefit from a strong infrastructure base, population stability and ongoing economic development initiatives. Sustainability and resilience are also becoming increasingly important, shaping how projects are designed and executed.

“We are optimistic about the future,” Davidson says. “Infrastructure needs across the country continue to grow, and communities are focused on solutions that are resilient, sustainable and cost-effective.”

Despite obstacles, RS&H also is optimistic.

“While near-term challenges such as political uncertainty, funding timing and workforce constraints persist, the underlying demand for infrastructure and technical innovation remains strong,” Jones says. “Aging infrastructure, evolving delivery methods and the need for advanced solutions present significant opportunities across sectors.”

The federal market, in particular, is poised for robust growth in the near term.

“With a diversified portfolio and a client-focused strategy, RS&H is well-positioned to navigate uncertainty and capitalize on long-term growth opportunities,” Jones says.