The last decade has seen Texas boom, leaping from the 12th largest state economy in the nation to the second. If the Lone Star State were its own country, its economy would outrank Russia and Canada.
The construction industry is a highly visible reflection of that economic vigor, demonstrated by all the highway expansion and improvement work being done throughout the state. The Texas Department of Transportation (TxDOT) has nearly $40 billion in projects currently underway or beginning soon on roads and bridges, ports and waterways, railways, and airports. Much of it is planned to meet anticipated future needs, as are other infrastructure upgrades in the state.
Recent times have been quite good for the Texas construction community. The robust state economy powers a highly positive outlook for the industry in the coming year, with some cautionary notes.
“Texas has been a growth leader for a number of years, attracting more expansions than any other state for well over a decade,” said Ray Perryman, Founder and CEO of the Waco, Texas-based Perryman Group. “At the same time, the state has seen by far more population growth than any other. Although cycles are inevitable, economic and population growth is the ultimate driver of the need for commercial construction.”
“The heavy highway construction industry in Texas is poised to remain robust in 2025,” said Jeff Gibson, incoming 2025 President of the Associated General Contractors (AGC) of Texas and President and CEO of Gibson & Associates, Inc. “Texas’ sustained population growth, ongoing infrastructure development, and business-friendly environment continue to drive demand. From urban areas to rural infrastructure projects, the need for expansion and modernization is fueling opportunities across the state.”
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“The people that read your magazine are going to do quite well, regardless of whether they're in construction or the supply business,” said State Senator Robert Nichols, Chairman of the Senate Transportation Committee. “Most of the funding is constitutionally dedicated.”
The passage by voters of Proposition 1 in 2014 and Proposition 7 the following year amended the state constitution to secure roadway funding that will meet the state’s current and future needs.
Hence the outlook for transportation projects, most notably highways, is assured to be strong. TxDOT is currently operating under a $39.5 billion budget for its 2024-25 fiscal year, which runs through July. The next fiscal year budget is expected to remain as high.
“Unprecedented inflationary cost increases, along with rapid population and economic growth in Texas, present numerous challenges for our highways and transportation network. TxDOT remains focused on working with our industry partners to meet those challenges,” TxDOT Executive Director Marc Williams said. “Efforts by Governor [Greg] Abbott and our Texas Legislature to dedicate critically needed funding is essential so that TxDOT can continue to do our part to support a world-class transportation system focused on safety and congestion relief.”
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See “TxDOT’s Top 10 List of Construction Projects” to learn more about the top TxDOT projects for 2025.
Texas ports export more than $207 billion and import over $101 billion worth of goods, which creates 1.8 million jobs. Six of the state’s ports ranked in total tonnage in the top 20 ports in the U.S. Texas is also home to the fourth busiest cruise terminal in the nation. TxDOT’s Maritime Division has a number of major projects that will let in 2025 to continue the preeminence of the state’s ports and multimodal transportation support system.
A $600 million letting in January will be for the Sabine-Neches Waterway deepening project that increases its depth from 40 to 46 feet to allow larger ships to reach its ports and waterway industries.
Two separate lettings in August will total $1.5 billion for the Bulk Material Terminal improvement project in the Port of Corpus Christi. Phase D ($30.5 million) includes land work on bulkhead upgrades, rail system modifications, constructing an access road, and other improvements and enhancements. The $70 million Phase E pays for upgrades to its bulkhead and mooring structures. Another $8.5 million being let that month will go toward reconstructing a 0.75-mile section of Sam Rankin Street to improve traffic flow and safety for trucks moving freight between cargo docks 8, 14, and 15 and 1 through 37 at the Port of Corpus Christi.
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Two August lettings will enable the Port of Brownsville to demolish Navigation Cargo Dock 3 ($4.8 million) and construct a new one. The port also received a $43 million grant from TxDOT last year toward deepening the Brownsville Ship Channel from 42 feet to 52 feet.
This year finds large projects beginning at two of the state’s major city airports. Dallas Fort Worth International Airport (DFW) has two new terminal ventures. A $3 billion expansion and modernization of Terminal C — its busiest terminal — is being built by a joint venture of three Texas-based firms: Austin Commercial, Azteca Enterprises, and Alpha & Omega. DFW is also adding a new 400,000-square-foot Terminal F at a cost of $855 million. It will include a Skylink rail system station and is being constructed by a joint venture that teams Phillips/May of Dallas, Texas, with Turner Construction, H.J. Russell & Co., and Carcon Industries.
Austin-Bergstrom International Airport is building a new arrivals/departures hall that adds 370,500 square feet to its Barbara Jordan Terminal to meet future expected capacity. The $865 million expansion will begin design work this year, and construction by Austin Commercial gets underway in early 2026. The project includes a new parking garage and roadway work to Presidential Boulevard that serves the terminal, and it is expected to be completed in 2028. It will also enable the planned building of Concourse B by Hensel Phelps Construction Company, which would add around 40 new gates to the airport by 2030. This is all part of a $4 billion expansion plan over the next dozen or so years.
TxDOT will also let some smaller airport projects this year. The Texas Gulf Coast Regional Airport in Angleton has a $16 million project being let on July 1 that includes runway reconstruction, taxiway rehabilitation, and airside electrical improvements. Being let on February 20 is a $12.9 million project for Big Lake Reagan County Airport to relocate a runway, reconfigure taxiways, and make apron and electrical improvements. Skylark Field Airport in Killeen, Texas, has a $6.1 million project being let this month for rehabilitating taxiways.
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Managing the state’s water demands has grown more critical as the state’s population continues to rise and its industrial base expands during a drought phase. The Texas Water Development Board’s (TWDB) low- and no-interest loans and grants recently approved funding for a number of large upcoming projects: $747.5 million for the Harris Reservoir Expansion Project in Brazoria, Texas, set to begin early this year; $535.1 million toward a $757 million seawater desalination plant in Corpus Christi, Texas, to be constructed by Kiewit.
The Upper Trinity Regional Water District was approved for over $320.8 million to continue construction of Lake Ralph Hall reservoir in Fannin County (which received a previous $513.5 million commitment from TWDB). The Coastal Water Authority will get $320 million to construct an additional pipeline to ensure continued uninterrupted water supply in Harris County and to support future demand. The new Turkey Peak Reservoir project in Palo Pinto County gets underway for $237.1 million this year.
“As Texas’ population continues to grow, increased pressure is placed on existing water supplies,” said Jessica Peña, TWDB’s Deputy Executive Administrator of Water Supply and Infrastructure. “Many communities are also facing challenges related to aging infrastructure. The Texas Water Development Board remains committed to assisting communities across the state with low-cost loans and grants to implement affordable water, wastewater, and flood projects.
“In November 2023, voters approved $1 billion for the newly created Texas Water Fund to support new water projects and infrastructure upgrades and repairs, with a focus on rural communities. In accordance with Senate Bill 28, these funds may be used to develop water supply projects that create new water sources in the state, transfer money to certain TWDB financial assistance programs, and fund a statewide water public awareness program. The TWDB anticipates consistent levels of funding from each of its financial assistance programs in state fiscal year 2025 as compared to 2024.”
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With the 89th Texas Legislature convening in Austin this month, AGC’s Gibson said that he sees “two issues that we need to be actively addressing at the capitol and across the state. First, our employees in our work zones are under assault by the traveling public. We are seeing increases in passing motorists willfully entering our lane closures simply because they do not want to sit a few extra minutes in the backup. This creates extremely dangerous situations for our employees that can turn deadly. We need the legislature to understand these life safety issues and work with [the] industry on driver education requirements as well as possibly greater consequences for intentional violation.
“The second item has been an issue in past sessions and already looks to be front and center in 2025. There are numerous bills already being filed targeting portable concrete batch plants and aggregate production operations. The concrete batch plant bills often look to solve a local problem with a statewide restriction. Batch plants must be either adjacent to or in very close proximity to large civil projects. The desired restrictions will only result in longer construction times as well as more trucks on the road due to greater haul distances.
“The Texas Commission on Environmental Quality already has the necessary tools to successfully regulate aggregate production operations. Additional overreaching regulation will only serve to restrict industry material supply. AGC has been successful in the past in keeping these overreaching and unreasonable bills from negatively affecting our industry, and we hope to be successful again in 2025.”
High-speed rail has been touted for the state since a Texas High-Speed Rail Authority was formed in 1989 by legislation. In 1991, a consortium (the Texas TGV Corporation) was awarded a 50-year franchise for a triangular line from Houston to San Antonio, then north to Austin and Dallas, and back south to Houston. Texas TGV failed to meet specified deadlines to move forward on the project, and the legislature later dissolved the authority.
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Various efforts have continued since then to build high-speed rail, which would be a boon to the industry. Two bills have already been filed for this session. House Bill (HB) 483 directs TxDOT to form a development agreement with a private partner to build a line that would run from San Antonio through Austin to the DFW Metroplex. HB 542 would enable state highway funds mandated for roads to also be used for such transit projects.
Senator Nichols does not think those bills or any others that might be introduced related to high-speed rail projects will be passed.
“There is not a high-speed rail anywhere on planet Earth that does not operate without a subsidy from the government,” he said. “And I don't think the State of Texas wants to start subsidizing a high-speed rail line.”
For all the positivity in the 2025 outlook, there still remain issues to address. “We must navigate rising material costs, supply chain challenges, and the demand for skilled labor to maintain this momentum,” Gibson said. “The industry’s ability to adapt and innovate will play a critical role in sustaining its growth trajectory.”
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“In addition, there are several sources of uncertainty, ranging from a new presidential administration to geopolitical tensions,” Perryman added. “While we could certainly see short-term disruptions, my analysis points to continued growth over a long-term horizon for the state, with expansion in cornerstone industries as well as emergence of new sectors of activity.
“No economy is immune to outside forces, but at this time — unless we have a major shock — I think the outlook is quite positive.”
Estimated Cost: $723.2 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: February 2025
Project Description: This project will reconstruct and widen I-35E from six to 10 lanes to Cesar Chavez Boulevard and reconstruct frontage roads. It will also reconstruct and widen a HOV lane from Cesar Chavez Boulevard to I-45 and construct frontage roads.
Estimated Cost: $626.2 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: September 2025
Project Description: This project will reconstruct eight lanes and add two new lanes between SH 288 and I-45, reconstruct the I-69/SH 288 interchange, and construct frontage roads and enhanced bike and pedestrian infrastructure.
Estimated Cost: $566.5 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: March 2025
Project Description: This project will widen the freeway from four to six lanes, improve frontage roads, and add local access lanes and bicycle/pedestrian facilities.
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Estimated Cost: $515.9 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: December 2024
Project Description: This project will construct an east drainage tunnel from I-35 underneath E. Cesar Chavez Street.
Estimated Cost: $494 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: September 2024
Project Description: This project will reconstruct I-35 between Martin Luther King Boulevard; add two northbound and southbound non-tolled managed lanes; construct bypass lanes, structures, drainage, and shared-use paths; and reconstruct intersections, ramps, general purpose lanes, and ramps.
Estimated Cost: $327 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: May 2025
Project Description: This project will expand I-35 from six to 10 lanes from north of AT&T Parkway to IH 410 S. and will replace bridges.
Estimated Cost: $276.3 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: November 2024
Project Description: This project will widen U.S. 290 from a three- to four-lane divided highway.
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Estimated Cost: $250.1 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: October 2024
Project Description: This project will reconstruct and widen the I-35 main lanes and expand them from six to eight lanes. It will also reconstruct frontage roads, extend the road where it is discontinuous, and realign ramps.
Estimated Cost: $211.1 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: January 2025
Project Description: This project will reconstruct the I-35E four-lane frontage roads and grade separation.
Estimated Cost: $182.8 million
Project Delivery Method: Design-Bid-Build
Projected Let Date: January 2025
Project Description: This project will be the future I-69 corridor.
