The first half of 2025 came up with a lot of changes happening, and as we enter into the second half of 2025, small AEC firms are functioning in a market that is slowly stabilizing. Even though many disruptions took place, federal infrastructure funding continues to cater demands in key areas like transportation, water, and energy.
We have also witnessed the slowing of private development. Economic uncertainty and cautious real estate investment are resulting in delays and cancellations in commercial and multifamily housing projects, and delivering modernizations is becoming increasingly challenging.
A recent survey by Reuters found that banks tightened lending standards for business loans, with the stricter standards rising in the Q1 to the highest in a year and a half for large firms, and in a year for small firms. Mortgage rates and long-term borrowing costs have persisted to oscillate around 6-7%, putting pressure on project financing.
Material availability has improved, but cost concerns still remain. In early 2025. the Trump administration announced a 25% tariff on steel and aluminum, making raw materials more expensive. In this fluctuating landscape, the three biggest concerns identified were labor shortages, inflation and material prices, and supply chain unpredictability.
This blog aims to break down the key challenges and opportunities small AEC firms should expect for the second half of 2025, highlighting workforce shifts, market outlooks, and practical strategies to adapt and grow.
Workforce Shifts: Bridging the Gap Between Experience and Emerging Skills
Overall workforce changes are creating new challenges for small AEC firms. Various experienced workers are retiring, and no amount of digital revamping can fill that gap. The industry is witnessing many seasoned engineers, site managers, and trade specialists exiting the workforce, and the loss of institutional knowledge from retiring professionals that has not been properly passed down is a growing concern for small AEC firms.
This space is further complicated by the demand for new skills. Data centers, renewable energy sites, and climate-resilient infrastructure require workers who are comfortable with digital tools, sustainability practices, and complex systems. The 2025 AEC Inspire Report claims that the AEC sector is grappling with a shrinking talent pool. With 67% of respondents citing talent challenges as one of their top three concerns, this issue surpasses even economic uncertainty and competition for new business.
Labor shortages continue to be a major challenge. Construction job openings continued to trend lower in the first half of 2025, a clear sign of slowing industry-wide demand for labor. Hiring activity was particularly weak in March, with 302,000 hires equivalent to just 3.6% of industry-wide jobs, the lowest rate ever recorded.
Strategies for Small AEC Firms
In response to these workforce and project changes, small AEC firms need strategies that help them adapt and stay competitive. Here are some important ones:
- Invest in training by helping current employees learn and use new skills generated by digital transformation such as Building Information Modeling (BIM), AI, and ecofriendly building practices. This approach helps close talent gaps and ensures the team is prepared for evolving project demands.
- Develop smart collaborations by teaming up with other small firms or subcontractors. These alliances can help firms combine their unique strengths, reach more people, save costs, and create exciting new opportunities.
- Outsource specialized work, such as designing, drafting, and modeling, to firms with the right expertise. The US engineering services outsourcing market size is estimated to grow by USD 187.62 billion at a CAGR of 32.14% between 2023 and 2028.
- Plan for supply chain delays by building stronger relationships with essential vendors, ordering materials in advance, and establishing backup suppliers. These steps help ensure project continuity and reduce the impact of unexpected disruptions.
Opportunities for AEC Firms in Changing Market
Small AEC firms have lately been confronting a lot of challenges, yet many of these firms are in a unique position to capitalize on several emerging trends:
Sustainability-Driven Projects Are in Demand
With stringent building codes and increased demand for energy efficient designs, sustainability has become the new reality. This shift has led to the adoption of net-zero energy buildings, and the increased use of sustainable materials like cross-laminated timber (CLT) and recycled concrete.
Artificial Intelligence (AI) Adoption
AI is becoming a necessary tool in the AEC sector. About 74% of AEC companies globally utilize AI in one or more phases of their projects, with significant applications in design (48%) and planning (42%). This technological shift enables firms to enhance efficiency, reduce errors, and improve project outcomes.
Building Information Modeling (BIM) Integration
Building Information Modeling (BIM) has been a cornerstone of digital transformation in the AEC industry, with 69% of firms reporting its usage. Embracing BIM can lead to better project visualization, coordination, and efficiency.
Prefabrication and Modular Construction
Modular and prefabricated construction methods are quickly being adopted by AEC firms because they help reduce costs, waste, and time. The global modular construction market size was estimated at USD 103.55 billion in 2024 and is projected to grow at a CAGR of 7.9% from 2025 to 2030.
The second half of 2025 presents small AEC firms with both challenges and opportunities. Market trends are changing, and stricter regulations are implemented, making projects more complex. However, firms that are able to adapt quickly are in a good position to compete.
These firms are advised to focus on what they can control, invest in their teams by adopting new technologies, and making smart collaborations with other firms. The best way to survive is to avoid risky sectors, and look for opportunities offered by infrastructure, sustainable projects, and using new methods of construction
At Intrivis Inc, we understand what today’s AEC firms need. With expertise in CAD, BIM, engineering staffing, and sustainable design, we help small firms navigate change and deliver smarter, future-ready projects. Contact us to explore how we can support your next project.
Also read, Top 6 AEC Industry Trends to Prepare for in 2025
