The 2025 Q3 Pulse of the Lighting Market report is produced by Channel Marketing Group with William Blair. The Q3 2025 report finds that the U.S. lighting industry faced a challenging, largely stagnant quarter, with most companies experiencing low or no growth, even after factoring in price increases driven by new tariffs. Increased prices did not offset declining unit volumes, leading most businesses to report flat or shrinking results, while a handful of firms achieved double-digit growth due to special circumstances, such as winning key projects, leveraging pre-tariff inventory, or benefiting from USMCA “Made in America” advantages.
Commercial Construction and Data Centers
The overall construction market struggled, with new projects not expanding and renovation activity too slow to absorb the downturn in new builds. Data centers, which are excluded from traditional commercial construction data, continue their rapid growth, but their need for lighting per square foot is much lower than traditional office buildings, resulting in little uplift for lighting suppliers despite construction spending shifting into this sector.
Distributor and Manufacturer Strategies
Distributors described Q3 as a cycle of “bid, rebid, and bid again,” driven by customers’ search for price declines amid uncertainty over tariffs and interest rates. Those able to excel in value engineering—collaborating with reps and lighting agents to deliver better solutions and control costs—were somewhat successful in winning business, while speculation and uncertainty paralyzed many others.
Manufacturers and reps face a similar challenge: generating demand via marketing, targeting vertical segments with tailored solutions, and taking advantage of local opportunities or incentives. Companies who invested in pre-tariff inventory or who can engineer compelling value propositions for contractors have found ways to buck the overall trend.
Tariffs and “Market Paralysis”
A significant factor impacting Q3 was uncertainty caused by tariffs, with distributors and manufacturers concerned about future price moves against a backdrop of slow-release project funding and stalled specifications. Mid-single-digit price increases were widespread, but did not translate to real growth due to offsetting declines in volume as end-customers delayed purchasing decisions in hopes of lower prices or tariff relief.
Almost half of specifiers are “concerned or see future activity slowing” six months out, a leading indicator of pipeline contraction that deserves attention. Manufacturers have largely exhausted their pre-tariff inventories and may announce further price hikes in coming quarters if cost pressures persist.
Opportunities: Renovations and Demand Generation
Despite market malaise, some companies are thriving by focusing on demand creation rather than demand capture. Renovations, particularly in healthcare (where thousands of facilities have outdated 2012-era LED retrofits), represent a significant unaddressed opportunity. By proactively mapping buildings to incentive and rebate programs—rather than waiting for client inquiries—distributors and contractors can drive new business.
The Inflation Reduction Act (IRA) and the enhanced 179D commercial building efficiency deduction offer further potential for demand generation, provided companies educate customers and package solutions, as these incentives require proactive engagement that most in the industry have yet to fully exploit.
Future Outlook and Strategic Considerations
Q4 is projected to be similar, with potential improvement from end-of-year projects or utility rebate business, though a “tariff overhang” could continue to paralyze the market. The critical question is what will happen when tariff uncertainty resolves: those who have built relationships and business pipelines during the slowdown will be best positioned to capture demand when project funding is released en masse. Ultimately, the market is bifurcating, with smart and proactive players gaining outsize rewards as the middle “hollows out.”
The report emphasizes that companies need to shift from reactive strategies—waiting for projects and market stability—to proactive demand generation and customer partnership to thrive in a market beset by uncertainty and disruptive dynamics.
More information is available here. The full report can be purchased for only $35 here.
Image above: Courtesy of Channel Marketing Group.
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