Key Takeaways
- Data center construction is one of the fastest-growing segments in early 2026, yet it remains too small to offset broad declines in private nonresidential construction and manufacturing put-in-place (i.e., the value of construction work actually completed during a period).
- Recent data shows data center spending rising at double-digit year-over-year rates while overall private nonresidential outlays have fallen for several consecutive months as major semiconductor and manufacturing projects taper off.
- Over the past year, data center construction costs and spending have shifted significantly, with increased investment and larger project sizes reflecting changing industry demands.
- Trillions of dollars in projected global digital infrastructure investment through 2030 are concentrating in a limited number of hyperscale campuses (large-scale data centers built for major tech companies such as Amazon, Google, and Microsoft), benefiting a narrow slice of highly specialized contractors rather than the broader industry.
- Persistent labor shortages, rising input costs, and supply chain constraints are slowing the delivery of data center projects even as owners continue to commit capital, reinforcing how atypical this segment is relative to interest-rate-sensitive sectors.
- For ABC Ohio Valley members, data centers represent a long-term strategic opportunity and a structural shift in where work will be found, but not a cure-all for regional construction slowdowns.
Introduction: The 2026 Data Center Boom Meets a Cooling Construction Economy
The numbers tell a story of two construction economies operating side by side. Early 2026 U.S. construction data reveal surging data center construction spending driven by artificial intelligence, cloud computing, and hyperscale demand. Hyperscale data centers are large-scale facilities built for major tech companies (such as Amazon, Google, and Microsoft) that account for roughly 70% of the expected capacity in the U.S. data center market. At the same time, total construction spending has cooled, with private nonresidential investment slipping even as data center outlays climb.
This creates a paradox worth noting: one of the fastest-growing slices of the market cannot counteract weakness in offices, traditional manufacturing, retail, and other private segments. The data center boom is real, but its benefits are concentrated rather than distributed.
From ABC Ohio Valley’s perspective, members feel both the opportunity and the frustration created by this imbalance. Specialized high-value work exists for firms with the right capabilities, but limited access to projects means many regional contractors must be strategic about how they pursue this market.
This article blends national trends with implications for regional commercial construction contractors, subcontractors, and suppliers in the Ohio Valley, helping you understand where the money is flowing and how to position your firm for the next era of nonresidential construction.
What Are Data Centers? An Essential Primer
Data centers are the backbone of the digital world, serving as highly specialized facilities that store, process, and manage vast amounts of data. At their core, data centers house rows of servers, storage arrays, and networking equipment, all designed to keep information flowing reliably and securely around the clock. These facilities are engineered for resilience, with redundant power supplies, advanced cooling systems, and robust security measures to ensure uninterrupted operation.
The importance of data centers has grown exponentially in recent years, driven by the explosive rise of artificial intelligence, cloud computing, and the ever-increasing demand for digital services. Every time a business migrates its operations to the cloud, streams video content, or deploys AI-powered applications, it relies on the capacity and storage provided by data centers. As organizations generate and consume more data than ever before, the need for facilities capable of handling massive workloads and providing scalable IT capacity has become critical.
Artificial intelligence, in particular, is reshaping the requirements for data centers. AI workloads demand high-performance computing power and rapid access to large datasets, pushing developers to build facilities with greater density, advanced cooling, and specialized infrastructure. This surge in demand for data storage and processing capacity is fueling a wave of investment in new data center projects, making them a focal point for construction spending and a key driver of change in the nonresidential construction market.
Defining Key Terms:
- Hyperscale: Large-scale data centers built for major tech companies (such as Amazon, Google, and Microsoft) that account for roughly 70% of the expected capacity in the U.S. data center market.
- AI-ready facilities: Data centers specifically designed to support artificial intelligence workloads, often requiring advanced power and cooling infrastructure. The construction costs for these specialized AI facilities can exceed $20 million per megawatt (MW) due to their advanced requirements.
- Liquid cooling: A technology that uses liquids to dissipate heat from high-density server racks, becoming essential to manage the increasing rack densities for AI hardware.
For construction professionals, understanding what data centers are—and why demand for them is accelerating—is essential for navigating the evolving landscape of commercial building. These facilities are not just another type of building; they are mission-critical infrastructure (meaning essential to the continuous operation of digital services) at the heart of the world’s digital transformation.
Recent Spending Trends: Data Centers vs. the Rest of Private Nonresidential
Private Nonresidential Construction Declines
Early 2026 reporting from the census bureau and industry trackers confirms a troubling pattern: private nonresidential construction has declined for several consecutive months. The primary driver is a sharp pullback in manufacturing construction as major semiconductor and battery factory projects wind down.
The large manufacturing projects that drove robust 2023–2025 construction spending are now transitioning from heavy construction to equipment installation and fit-out work. This shift generates far less put-in-place spending (the value of construction work actually completed during a period), dragging down overall totals even as headlines celebrate new facility announcements.
Data Center Construction Outpaces the Market
The dataset used for this analysis includes detailed information on private construction spending in the United States, with specific data on data center construction. Data as of March 2026.
Against this backdrop, data center construction stands out with measurable month-over-month gains:
| Metric | Value (in billions of dollars) | Context |
|---|---|---|
| YTD spending (Nov 2025) | $53.7 billion | 138.6% increase over same period last year (2024) |
| November 2025 single month | $9.8 billion | Nearly 4x November 2024’s $2.6 billion |
| Average project cost | $597 million | 12-month rolling average |
| Cost per square foot | $960 | 50% increase year-over-year |
A critical nuance: official statistics often categorize data centers as “office” or “commercial,” masking the true scale and growth rate of this subsector. When tracked separately, data center performance far exceeds legacy office building construction, which continues to decline.
If referencing the chart below, the line represents the 12-month moving average of data center construction start spending, shown in billions of dollars.
From a GDP standpoint, even multibillion-dollar annual increases move overall output only fractionally. Data centers represent roughly 6% of total private construction spending. This explains why the broader construction economy can still look weak despite spectacular data center growth.
The Scale of the Data Center Surge: From Billions to Trillions
Unprecedented Growth in Spending
The growth trajectory of data center construction spending is unprecedented in commercial construction. U.S. private data center construction spending rose from $1.8 billion in 2014 to $28.33 billion in 2024—a roughly 15-fold increase over a decade. Full-year 2025 projections exceed $60 billion, suggesting a compound annual growth rate of 98% over four years.
The industry has shifted from traditional enterprise server rooms and co-location facilities to massive hyperscale campuses (large-scale data centers built for major tech companies), purpose-built for cloud providers and big tech platforms. These facilities are designed for extreme density, featuring AI-optimized architectures with liquid cooling (a technology that uses liquids to dissipate heat from high-density server racks, essential for managing increasing rack densities for AI hardware), high-power GPU rack density, and redundant critical systems.
Global Investment and Geographic Concentration
Global projections are staggering. McKinsey estimates nearly $7 trillion will be spent globally on building and upgrading data centers over the next five years. This investment breaks down as follows:
- 15% for land and building requirements
- 25% for power generation and cooling systems
- 60% for technology and hardware required to operate facilities
Demand for AI-specific data center capacity is predicted to account for more than $5 trillion of this investment. Even conservative estimates represent a fundamental shift in how capital expenditure is allocated within the built environment.
Where is the money flowing? Large greenfield campuses in power-rich markets, expansions of existing technology corridors, and conversions of industrial land for high-density computing. Geographic concentration is striking: through November 2025, the top five states (Louisiana, Texas, Virginia, Mississippi, and Pennsylvania) captured nearly $40 billion, representing 74% of total YTD spending. Major city hubs such as Dallas, Ashburn, and Phoenix are also seeing significant data center investment, reflecting the importance of city-level infrastructure and connectivity.
The map shows the distribution of data center construction spending across states and major cities, highlighting regional trends and investment hotspots.
Despite these headline figures, data center work still accounts for a relatively small share of total nonresidential square footage and employment, limiting its ability to buoy the entire sector.
What’s Driving Resilient Data Center Construction Spending in 2026?
AI and Cloud Demand
The fundamental demand drivers behind resilient spending on data center infrastructure are structural rather than cyclical:
- AI and Generative AI Workloads: The rapid scaling of AI training and inference workloads requires massive computing infrastructure. Companies are racing to deploy the IT capacity needed to remain competitive in AI development.
- Cloud Migration: Every percentage point of workload migration from on-premises to cloud platforms represents a substantial increase in data center capacity requirements. This trend transcends any single business cycle.
- Digital Service Expansion: Streaming services, edge computing, and distributed infrastructure needs continue growing regardless of near-term economic conditions.
Financing Models
Major technology companies—Amazon Web Services, Microsoft Azure, Google Cloud—are committing multi-year capital budgets that show remarkable resilience to macro headwinds. These companies have predictable, recurring digital service revenues that provide substantial financial insulation from short-term interest rate hikes.
The financing model matters. Data center developers are not relying on traditional commercial mortgage structures. Instead, they fund construction through corporate balance sheets, debt offerings backed by stable service contracts, and internal cash flows from high-margin cloud services.
Power Infrastructure Challenges
Power infrastructure challenges are intensifying as the total power demand for new data center projects continues to rise, often outpacing the available supply in key markets. There is an expected gap between power supply and demand in the coming years, making investments in new power sources and grid upgrades critical to support future data center expansion.
Increasing Project Complexity
Emerging trends are increasing project complexity and value:
- Higher rack densities requiring advanced power distribution
- Liquid cooling systems for AI-optimized facilities (liquid cooling is essential for managing increasing rack densities for AI hardware)
- Power-hungry GPU architectures demanding specialized electrical infrastructure
Data center costs reflect this complexity. Standard builds run $10–12 million per megawatt, while AI-ready facilities (data centers specifically designed for AI workloads, often exceeding $20 million per MW due to advanced power and cooling requirements) cost $20 million or more per MW. Owners are demanding faster delivery, tighter performance guarantees, and integrated design-build solutions, reshaping expectations placed on construction contractors.
A Narrow but Deep Opportunity: Why Data Centers Benefit a Limited Slice of Builders
Data center construction represents one of the most technically demanding segments of nonresidential construction. Success requires mastery of several specialized domains:
- Redundant electrical systems with backup power generation
- Advanced cooling infrastructure (increasingly liquid cooling, which is essential for managing increasing rack densities for AI hardware)
- Fire suppression systems rated for server environments
- Sophisticated security and access control
- Commissioning protocols ensuring mission-critical uptime (mission-critical meaning essential to the continuous operation of digital services)
This specialization creates significant barriers to entry. The market naturally segments into a relatively small pool of national and large regional contractors with deep design-assist capabilities, mission-critical experience, and bonding capacity to handle multi-billion-dollar programs. Firms like Turner Construction, Hensel Phelps, JE Dunn, and other mission-critical specialists have built substantial market share. Associated general contractors play a critical role in managing these large-scale data center projects, leveraging their expertise to navigate industry challenges and deliver complex builds.
The concentration dynamics are striking: ConstructConnect tracks 17 near-term megaprojects with values exceeding $1 billion each, accounting for nearly 93% of the total project value for planned developments. Fewer projects, but each one extremely large in dollar value and technical scope.
What this means for ABC Ohio Valley members:
Prime opportunities often go to major national general contractors, while local merit-shop contractors and specialty trades participate as key subcontractors for:
- Electrical packages (the largest spend category)
- Mechanical and HVAC systems
- Structural steel erection
- Precast concrete
- Civil site work
Data centers are a relationship-driven market. Prequalification, safety records, workforce depth, and proven ability to coordinate complex commissioning matter as much as price. Building these relationships now positions firms for opportunities as the market expands.
Cost, Supply Chain, and Labor Constraints in a High-Demand Segment
Material Cost Inflation
Despite strong demand and abundant capital, data center projects face significant operational headwinds that differentiate them from typical commercial construction.
- Steel, copper, switchgear, and transformers remain elevated
- Specialized electrical components face long lead times
- Transformer lead times have become a critical constraint
- The producer price index is widely used to track inflationary pressures in nonresidential construction, providing insight into rising costs for materials and services specific to data center construction during the current AI infrastructure boom.
Power Infrastructure Challenges
- Grid operators like PJM and ERCOT now require non-refundable deposits equal to 20% of total project cost—often $50 million to $200 million—before interconnection studies begin. This front-loads capital exposure and creates substantial financing hurdles before construction even commences.
Labor Availability
- Critical shortages exist for qualified electricians, low-voltage technicians, pipefitters, and controls specialists. These trades command premium wages in competitive markets, particularly in hyperscale hub regions. The data confirm that data center construction is constrained more by labor availability and statistics than by financing—a sharp contrast to interest-rate-sensitive sectors.
Industry analysis reveals that nine out of 10 large infrastructure projects experience schedule overruns, with power procurement, transformer lead times, and permitting delays cited as top causes. Over 60% of data center outages trace back to power, cooling, or cabling decisions made during construction.
The ABC Ohio Valley connection:
Merit-shop apprenticeship, workforce development, and safety programs help regional firms staff complex data center projects safely and productively. Owners and GCs increasingly seek contractors who can:
- Self-perform key scopes
- Maintain high safety performance
- Ramp crews quickly when needed
These factors differentiate ABC members in competitive bidding situations.
The Paradox for the Construction Economy: A Boom That Can’t Lift All Boats
The central paradox remains: despite impressive growth rates and high-profile announcements, data center construction is not large or diffuse enough to counterbalance simultaneous declines in manufacturing, office construction, retail, and other private nonresidential segments.
The math is straightforward. Even if data center spending reaches $60 billion in 2025, total U.S. private construction spending will still exceed $1 trillion annually. Data centers represent meaningful growth but cannot offset the contraction in manufacturing and construction as megaprojects transition.
The capital-intensive, geographically concentrated nature of data center projects means many regions—and many contractors—see little direct benefit:
| Geographic Reality | Data |
|---|---|
| Top 5 states share | 74% of YTD spending |
| Next 6 months concentration | 80% in 5 states |
| Primary hub regions | Texas, Virginia, Pennsylvania, North Carolina, Illinois |
This concentration prevents data center construction from functioning as a tide that lifts all boats. It functions as a regional uplift in power-rich, fiber-rich markets while leaving other regions dependent on whatever commercial, industrial, and public construction spending remains available.
The result is a two-track industry:
- Track One: Firms embedded in AI, cloud, and mission-critical work enjoy robust backlogs and pricing power
- Track Two: Companies tied to conventional office buildings, small industrial, retail, and hospitality face leaner years
This divergence complicates workforce planning and training investment across the broader construction ecosystem. For industry leaders and policymakers, needs vary sharply by segment and region.
Implications and Strategies for ABC Ohio Valley Members
While the Ohio Valley is not yet a top-tier hyperscale hub, the region connects to growing corridors in the Midwest and Mid-Atlantic that support cloud and AI infrastructure. Supply chain relationships, labor mobility, and equipment transport all create secondary opportunities.
Specific steps for merit-shop contractors seeking data center work:
- Pursue mission-critical safety training that meets hyperscale owner requirements.
- Invest in BIM (Building Information Modeling, a digital representation of the physical and functional characteristics of a facility) and VDC (Virtual Design and Construction, the use of digital tools to plan and manage construction projects) capabilities that are essential for coordinating complex MEP systems.
- Strengthen partnerships with electrical and mechanical subcontractors experienced in high-density facilities.
- Build prequalification credentials with national GCs active in mission-critical markets.
- Document safety performance meticulously—OSHA incident rates matter significantly.
ABC Ohio Valley’s role in preparing members:
- Workforce development programs aligned with data center trade needs
- Apprenticeship pipelines in electrical, mechanical, and controls specialties
- Safety education meeting stringent hyperscale requirements
- Networking opportunities with larger GCs active in mission-critical work
Diversification remains essential. Balance the pursuit of specialized data center opportunities with steady work in healthcare, education, light industrial, and public projects. Overreliance on any single sector creates risk.
Monitor policy developments around energy infrastructure, permitting, and tax incentives in Ohio, West Virginia, and Kentucky. These factors influence where future data center investments land, and proactive advocacy can position the region for growth.
Long-Term Outlook: Data Centers as a Structural Shift, Not a Temporary Spike
Data center construction spending represents a long-term structural change tied to digitization, AI, and cloud services, rather than a short-lived bubble driven by a single product cycle. The world’s computing needs will not decrease—they will compound.
Expansion will likely move through multiple phases over the next decade:
- Phase 1 (Current): Greenfield hyperscale campuses and massive expansions of existing sites
- Phase 2: Densification and retrofits of existing facilities as technology density increases
- Phase 3: Growth of smaller edge and regional sites closer to end-users for latency-critical applications
While this growth will not fully offset cyclical downturns in other construction categories, it will act as a stabilizing force and a key source of high-skill, high-value projects for prepared firms.
Contractors, developers, and suppliers should view data centers as part of a broader reallocation of capital toward infrastructure that supports AI, automation, and digital services. This shift influences design standards and workforce needs across commercial construction, from buildings to equipment to resource allocation.
The call to action for ABC Ohio Valley members:
Treat data center capabilities, safety excellence, and workforce training as strategic investments in the next era of nonresidential construction. The firms that build relationships, develop specialized capabilities, and maintain rigorous safety performance now will be positioned to capture billions in opportunities as this market matures.
The money is flowing. The question is whether your firm will be ready to capture your share.
FAQ
How big is data center construction compared with overall nonresidential construction?
Data center construction spending has grown rapidly to tens of billions annually—projected to exceed $60 billion in 2025—but still accounts for approximately 6% of total private nonresidential construction value in the United States. While this share is meaningful and growing, it remains too small to offset declines in larger categories like manufacturing, traditional offices, and commercial buildings. The full data shows concentrated growth rather than broad-based expansion.
Are data centers a realistic opportunity for small and mid-sized contractors?
Most smaller firms participate as specialty trade contractors or tier-two subcontractors rather than as prime contractors. Realistic entry points include electrical work, concrete, steel erection, mechanical systems, and finishes. Association training, safety certifications, and formal prequalification with national GCs improve chances of winning this work. The majority of spending flows through established relationships, making networking and credential-building essential investments.
What skills and capabilities are most in demand on data center projects?
Key areas include advanced electrical systems (which account for 57.1% of total construction costs), critical mechanical and HVAC, including liquid cooling systems (essential for managing increasing rack densities for AI hardware), controls and commissioning expertise, strong safety culture with documented performance, and proficiency with BIM/VDC technology. Owners prioritize teams that can deliver predictable uptime, meet aggressive schedules, and coordinate complex commissioning sequences. The estimated value of these specialized capabilities commands premium rates.
How do rising interest rates affect data center construction compared to other sectors?
Unlike typical commercial projects reliant on short-term financing, data centers are often funded by large technology companies with strong balance sheets and long-term digital revenue streams. This makes them significantly less sensitive to rate hikes than offices, retail, or lodging developments. While interest rates have created uncertainty and slowed traditional commercial construction, data center investment continues because owners have access to corporate capital and recurring service revenues that provide financial insulation.
What role can ABC Ohio Valley play in helping my company pursue data center work?
ABC Ohio Valley supports members through apprenticeship programs in electrical and mechanical trades critical to data center construction, safety, and supervisory training meeting hyperscale owner requirements, networking events connecting regional contractors with national GCs active in mission-critical markets, and advocacy for energy and permitting policies that encourage regional data center investment. Members benefit from workforce development resources that help build the documented safety performance and crew depth that owners and GCs require for project access.
