In 2024, Arizona's construction industry experienced significant growth, marked by increased employment, substantial investments in large-scale projects, and ongoing challenges related to labor shortages. The sector's expansion was driven by both public infrastructure developments and private sector investments, positioning Arizona as a burgeoning hub for construction activities.

Employment Trends and Labor Challenges

Construction employment in Arizona reached 217,100 in August 2024, reflecting a 2% increase from the previous year and a 23% rise since February 2020.

Despite this growth, the industry continued to grapple with a shortage of skilled labor. A national survey indicated that 74.2% of construction markets faced difficulties in finding skilled workers, a trend that was evident in Arizona as well.

This labor scarcity led to increased labor costs and project delays, impacting the timely completion of various construction initiatives.

Contractor Licensing and Activity

The Arizona Registrar of Contractors (ROC) issues licenses across multiple classifications for commercial and residential work.

In 2024, there was a notable uptick in new contractor licenses, particularly in classifications related to general contracting and specialized trades. However, the influx of new contractors did not fully alleviate the skilled labor shortage, as many new entrants lacked the necessary experience for complex projects. The ROC also intensified efforts against unlicensed contracting, conducting statewide operations that resulted in multiple cease and desist orders.

Major Companies and Notable Projects

Several companies played pivotal roles in Arizona's construction landscape in 2024. Notably, Taiwan Semiconductor Manufacturing Company (TSMC) made significant progress on its $12 billion semiconductor fabrication plant in Phoenix. Despite facing challenges related to labor shortages and higher construction costs, TSMC's project is poised to bolster Arizona's position in the tech manufacturing sector.

In the renewable energy sector, AES Corporation commenced operations of the first phase of the Chevelon Butte Wind Farm, adding 238 megawatts to the state's power grid. The second phase, expected to contribute an additional 216 megawatts, is slated for completion in 2024.

Infrastructure projects also marked the year, with the Arizona Department of Transportation (ADOT) initiating the expansion of Interstate 10. The project aims to add a third lane in each direction between Chandler and Casa Grande, with completion anticipated in 2026.

Comparison with 2023

Compared to 2023, 2024 saw a more pronounced increase in construction activities, particularly in the technology and renewable energy sectors. The number of large-scale projects initiated or completed in 2024 surpassed those of the previous year, reflecting growing investor confidence in Arizona's market. However, the persistent skilled labor shortage remained a challenge, similar to the previous year.

Projections for 2025

Looking ahead, the construction industry in Arizona is expected to continue its growth trajectory into 2025. Ongoing projects, such as TSMC's semiconductor plant and various renewable energy initiatives, are set to drive demand for construction services. Additionally, federal investments, including those from the CHIPS and Science Act, are anticipated to further stimulate the sector. However, addressing the skilled labor shortage will be crucial to sustaining this growth and ensuring the timely completion of projects.

In conclusion, 2024 was a transformative year for Arizona's construction industry, characterized by significant developments and persistent challenges. The state's ability to attract major investments and undertake large-scale projects underscores its potential as a key player in the national construction landscape. Nonetheless, strategic efforts to enhance workforce development and streamline regulatory processes will be essential to capitalize on these opportunities in the coming years.