General contractors continue to face multiple headwinds as we move into the second half of 2025. Labor shortages continue, while increasing overhead costs and longer material lead times are ongoing problems. In spite of this, a recent market survey released by ServiceTitan reported high optimism among the 1,000 trade owners and executives questioned. For one thing, 66% of those asked said they came into 2025 with stable and/or increasing revenues.
“I was pleasantly surprised to see such strong early positive results from contractors,” Alex Kablanian, Senior Vice President and GM of Commercial & Construction at ServiceTitan, told ConnectCRE. “Time and again, commercial contractors prevail, whether they are facing macroeconomic pressure, regulatory changes or market shifts.”
The Not-So-Good News
Some of the concerns expressed by survey participants included the following:
- 73% of those surveyed are anticipating an increase in material costs, with 59% demonstrating concerns that those fees will impact profitability
- 70% pointed out that operational gaps (like a lack of fast access to warranty and service agreement data) are a struggle
- 54% of respondents said they anticipate an increase of two weeks or more in lead times
Kablanian explained that some trades outside of Mechanical, Electrical, and Plumbing (MEP) tended to be more pessimistic. Additionally, “contractors with fewer than 20 technicians were also less optimistic,” Kablanian pointed out. He explained that the 47% reported less optimism, which was split between 27% (neutral) and 20% (pessimistic).
“The macro climate’s frequent shifts likely contribute to this ‘wait and see’ neutral group and those already feeling negative effects,” Kablanian said.
Then, there are the tariffs. The survey reported that 73% of respondents are anticipating increases in material prices due to inflationary pressures coming out of international trade agreements.
Labor Shortages and Lead Times
Kablanian noted that respondents aren’t sitting around complaining about the economic volatility. He pointed out that contractors are addressing labor shortages in many ways. One such strategy is investing in employee training and skills development. Technology investments are also part of such planning.
“48% said they plan to invest in new technology, and 38% will plan on consolidating their current tech stack,” Kablanian said, adding that added technology can improve productivity by reducing administrative tasks, expanding communication abilities and offering immediate access to necessary data.
In combating anticipated lead time increases, Kablanian said that many contractors will implement earlier procurement strategies and build extended “space” into their schedules to minimize delays. Technology will also play a role here, he added. “They leverage technology for better inventory visibility and forecasting, allowing for more precise ordering and reduced shortages,” he explained.
The Fundamentals Behind the Optimism
Kablanian said that the percentage of optimistic respondents increased to 53% this year from 39% the previous year. He explained that the foundation of this growth includes flexibility and evolving technology, “equips contractors with the tools and resources they need to navigate headwinds more easily.”
And there is more to come. Kablanian said that artificial intelligence-powered technology also has significant potential to assist in areas such as scheduling, predictive maintenance, field assistance and proposal creation. So, despite the uncertain macroeconomic issues, the survey did not showcase just negative feedback. Said Kablanian: “Despite persistent challenges like labor shortages and rising costs, the commercial service sector demonstrates remarkable resilience and optimism.”
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