2025 U.S. Tunnel Outlook

2024 was another busy year for the tunneling industry in the United States with a range of projects underway and upcoming across the country. 2024 saw a flurry activity for the Hudson Tunnel Project (Gateway Program) in the New York metropolitan area – one of the largest tunnel projects undertaken in the United States to date, as well as continuing highway, subway, sewer and water tunnels across the country.

A look at the active U.S. tunnel projects tracked by TBM: Tunnel Business Magazine shows there are approximately 30 large projects in various stages of construction totaling nearly $50 billion – led by the Hudson Tunnel Project, the VTA BART Silicon Valley Phase II project in San Jose, California, and the Frederick Douglass Tunnel in Baltimore.

And, there are plenty more projects on the horizon, including continued buildouts of transit systems in Los Angeles, Seattle and New York – notably the Second Avenue Subway Phase 2 project which appears to be back on track after sorting out funding issues in late 2024. In the meantime, planning continues for what could turn out to be massive projects in California (the Delta Conveyance Tunnels and California High Speed Rail buildout in northern and southern California) and in Texas (Houston Flood Control Tunnels). Estimates put these programs potentially north of $20 billion each.

MARKET SEGMENTS
Transportation Tunnels
Transportation tunnels have been the most dynamic segment within the tunneling market over the past few years with the ramping up of several large projects – notably the previously mentioned Hudson Tunnel Project, the Frederick Douglass Tunnel, and the VTA BART Silicon Valley Phase II project.

The Hudson Tunnel Project has been envisioned for decades. It involves building a new twin-tube crossing of the Hudson River to ease the burden on the existing North River Tunnels that were completed in 1910 and sustained significant damage during Superstorm Sandy in 2012. The new tunnels, projected to be open in 2035, will allow the refurbishment of the existing tunnels.

Funding for the full $16 billion program has been secured, and the Gateway Development Commission, which is overseeing the project, reports that seven of the 10 construction packages that comprise the program are under construction or are in procurement. GDC awarded the Palisades Tunnel contract in August, issued the FRP for Hudson River Tunnel in October, and awarded the Manhattan Tunnel Project contract in February 2025.

The $6 billion Frederick Douglass Tunnel in Baltimore involves the construction of 2 miles of twin-tube tunnels to replace low-speed, brick arch tunnel constructed in the 1870s that constitutes a bottleneck along the Northeast Corridor. Amtrak awarded a CMAR contract to Kiewit/Shea in February 2024 and awarded a Delivery Partner contract to ADVANCE JV (AECOM/Jacobs with Sener, Turner & Townsend, RailPros, Aldea, Dr. Sauer and others) in April 2024. Tunnel construction is expected to begin in 2026.

The VTA BART Silicon Valley Phase II Extension involves 5 miles of single-bore tunnel under downtown San Jose that will complete a full ring around San Francisco Bay as part of the BART (Bay Area Rapid Transit) network. What is notable about the project is the use of a large-diameter, single-bore tunnel that will house twin tracks and stations. It represents that first bi-directional TBM bored transit tunnel in the United States, and, at nearly 54 ft in diameter, will be the second-largest TBM ever used in North America (behind the TBM used for the SR 99 tunnel in Seattle, which was 57.5 ft in diameter.) VTA expects to mobilize the tunnel contractor early in 2026.

In Virginia, two highway tunnel projects are under construction – the Hampton Roads Bridge-Tunnel for VDOT and the nearby Parallel Thimble Shoal Tunnel for the Chesapeake Bay Bridge and Tunnel District. These projects represent only the third and fourth TBM-bored highway projects in the United States (behind the Port of Miami Tunnel and the SR 99 Tunnel in Seattle). At 46 ft in diameter, the TBM being used for the Hampton Roads Bridge-Tunnel is the largest variable density TBM used to date in the United States, and the fourth largest overall.

Water/Wastewater
Tunnels to store and convey combined sewer overflows have provided steady work for the tunnel industry dating back to the 1970s. Today, there are large, active programs underway in Washington, D.C., St. Louis, Missouri, Cleveland, Ohio, Columbus, Ohio, Providence, Rhode Island and others. In Cleveland, six of the seven major tunnels for the Northeast Ohio Regional Sewer District have been completed or are underway, while in Washington, the last of its main tunnels – the Potomac River Tunnel, was awarded in fall 2023.

The DigIndy program in Indianapolis, Indiana, meanwhile, is expected to finish this year, completing 28 miles of 20-ft, 2-in. diameter tunnel since the first of six tunnel segments was contracted in 2011.

As some CSO program are winding down, there are still three major tunnels to build as part of Project Clear in St. Louis (Lower & Middle Des Peres Storage Tunnel, River Des Peres Tributaries CSO Tunnel, Upper River Des Peres CSO Storage Tunnel), while the Allegheny County Sanitation (ALCOSAN) Clean Water Plan is about to ramp up in Pittsburgh, Pennsylvania. The ALCOSAN program comprises three major tunnel segments along the Ohio, Allegheny and Monongahela rivers.

Combined sewer tunnels are not just for larger metropolitan areas, as projects are underway in Akron, Ohio (Northside Interceptor Tunnel), Manchester, New Hampshire (Cemetery Brook Drain Tunnel) and Lynchburg, Virginia (Blackwater CSO Tunnel). Also, Howard County, Maryland, has begun construction of $140 million, 1-mile long flood control tunnel – the largest public works project in the county’s history – in response to major flooding events in recent years that resulted in significant damage in downtown Ellicott City.

On the drinking water side, the New York City Department of Environmental Protection awarded the $1.1 billion Kensico-Eastview Connection Tunnel Project to Frontier-Kemper Constructors in October 2024. This unique project includes construction of a 2-mile long tunnel, 27 ft in diameter and approximately 500 ft deep, to connect DEP’s Kensico Reservoir and its Catskill/Delaware UV disinfection facility, enhancing resiliency and redundancy for New York City’s water supply system serving more than 8.8 million people.

While the United States has made significant strides in water quality since the passage of the Clean Water Act in 1972, there is a still a demand for wastewater and stormwater system upgrades going forward. According to a 2022 EPA survey, at least $630 billion will be needed over the next 20 years to protect our nation’s waterbodies. EPA reports similar estimates for drinking water projects – $625 billion over 20 years.

MARKET FACTORS
Federal Funding
Recent increases in federal funding for water/wastewater and transportation projects have spurred spending. Notably, U.S. DOT in recent years allocated more than $16 billion in funding for projects along the Northeast Corridor, the busiest transit section in the country, with $3.8 billion set aside for the Gateway Program in New York/New Jersey, and $4.7 billion for the Frederick Douglass Tunnel as part of the B&P Tunnel Replacement Program in Baltimore.

Other transportation projects receiving significant funding include the VTA’s BART Silicon Valley Phase II Extension project in San Jose, and the Second Avenue Subway Phase II project for MTA in New York.

On the water/wastewater side, although not directly tied to tunneling projects, Congress approved appropriations for the Clean Water State Revolving Fund ($1.63 billion) and Drinking Water State Revolving Fund ($1.13 billion) loan programs.

With a new Administration and Congress beginning in 2025, it will be interesting to see if these trends continue.

Ridership Trends
Expanding transit networks naturally depends on ridership, which experienced a sharp decline in 2020 due to the COVID pandemic. According to the American Public Transportation Association, the number of annual trips per year decreased from 9.9 billion in 2019, to 4.7 billion in 2020 – a drop-off of more than half. In the years since, ridership – while still below pre-pandemic levels – has been steadily increasing, rising to 7.1 billion in 2023. This represents a 15.6 percent increase over 2022, although still 27.8 percent less than 2019 ridership.

Highlights include:

• Los Angeles Metro reports 11.6% increase in overall ridership (2023 vs. 2022)
• New York MTA reports 24% increase in subway ridership (2023 vs. 2022)
• D.C. WMATA Metrorail ridership up 8% (July 2024 vs. July 2023)
• Seattle Sound Transit systemwide ridership increased 17% (2023 vs. 2022)
• Chicago CTA up 14% (2023 vs. 2022)
• Boston MTBA up 10.4% (Oct. 2024 vs. Oct. 2023)
• Amtrak reports all-time high ridership for FY 2024 (15% increase vs. FY 2023)

Voter Trends
Another positive trend for transit-related underground construction projects is the willingness of voters to approve funding. According to the American Public Transportation Association, 46 of 53 measures for public transportation were passed by voters in 2024 (as of Nov. 6), an 86.7 percent success rate. The initiatives will provide more than $25 billion for transportation improvement projects in the coming years.

Going back, there have been voter-approved initiatives that have more directly impacted underground projects. In Los Angeles, voters supported transportation projects by passing Measure R (2008, $35 billion in funding) and Measure M (2016, $120 billion in funding) – sales tax increases to help pay for transportation projects. Measure M, in fact, passed with 71.15 percent support. Also in 2016, voters in the Seattle area approved Sound Transit 3 (ST3), a ballot measure that allocates $54 billion in funding to expand and improve transportation in the region. ST3 was planned to add 62 miles of light rail, completing a 116-mile regional system. In 2020, voters in Austin, Texas, approved Project Connect, a $7.1 billion regional transportation plan, which included a 1.7-mile tunnel in downtown Austin (although that tunnel is being reconsidered).

While most of the voter-approved initiatives across the country do not directly include underground construction, the support for efficient public transportation networks is a positive sign for the tunneling industry.

Urbanization
Continuing urbanization drives demand for underground infrastructure in our cities, mirroring a worldwide trend. ITA reports that by 2050, 70 percent of the world population will be living in cities. In the United States, the U.S. Census Bureau reports that urban population accounts for 80 percent of the total population.

Of course, public transportation can have the most impact in densely populated areas. The Census Bureau report identified the United States’ most densely populated areas as:

• Los Angeles-Long Beach-Anaheim, CA
• San Francisco-Oakland, CA
• San Jose, CA
• New York-Jersey City-Newark, NY-NJ
• Honolulu, HI

The top three largest urban areas are 1) New York-Jersey City-Newark, NY-NJ (19.4 million); 2) Los Angeles-Long Beach-Anaheim, CA (12.2 million); and 3) Chicago, IL IN (8.6 million). As far as growth, the Census Bureau reported that the cities growing at the fastest rate are: 1) Austin, TX (32.8 percent); 2) Raleigh, NC (25.1 percent); and 3) Orlando, FL (22.7 percent).

Accordingly, these areas are also some of the most active in the tunneling space, with several large water, sewer and/or transportation projects in construction and in planning.

Resiliency
As we continue to see increasing severity of storms and weather events across the country, the need to build infrastructure to provide resiliency is also growing. A recent case in point is Houston, which, according to the National Hurricane Center, sustained $125 billion in damages as a result of Hurricane Harvey in 2017. The Harris County Flood Control District is studying the possibility of building up to eight large-diameter tunnels (up to 45 ft in diameter) to help mitigate the impacts of future storms. According to the WEF Stormwater Report, the plan could cost up to $30 billion.

In Boston, planners from the Massachusetts Water Resources Authority are planning a large-scale project to help protect its drinking water system. The MWRA Metropolitan Water Tunnel Program would see the construction of approximately 15 miles of water tunnels, at a cost of about $2 billion, to ensure reliability of drinking water to residents in the greater Boston area. The project was precipitated by a 2010 water main break followed by a 2024 tunnel incident that had an estimated economic impact of approximately $360 million per day.

CONCLUSION
The tunneling market remains strong in the United States with several ongoing and upcoming projects and programs. The demand for tunnels for upgraded sewer and water systems and improved transportation networks is driven by aging infrastructure and increasing populations, as well as a public desire for improved quality of life. Additionally, the impacts of climate change will create opportunities for projects to increase the resiliency of our urban areas.