Commercial Building Contractors NAICS 2362

Mar 6, 2026 - Data Centers Outbid Residential Developments

• The rapid growth of artificial intelligence is fueling a data-center construction boom that significantly impacts the commercial real estate and housing industries, according to The Wall Street Journal. Tech giants are outbidding residential developers for vacant land, with some parcels selling for over $3 million per acre. This shift has transformed the commercial landscape, as developers find that server farms offer higher profit margins than traditional housing projects. In Northern Virginia, data centers accounted for up to 30% of land development in recent years, which has decreased the available inventory for new homes. Furthermore, the massive scale of these projects disrupts the broader construction sector by creating intense competition for essential labor and materials, including concrete, wiring, and electricians.
• Global hotel construction reached a record 15,922 projects, or about 2.4 million rooms, in the fourth quarter of 2025, rising 1% year over year as higher-tier segments fueled growth, according to Lodging Econometrics and reporting by Hotel Dive. In the fourth quarter, 6,140 projects were under construction, 3,845 were set to break ground within 12 months, and a record 5,937 were in early planning. The US led with 39% of global projects, followed by China at 23%. Luxury and upper upscale pipelines hit record highs, with luxury up 8% in projects and 4% in rooms. US luxury projects also reached a record 95. Hyatt and Marriott plan to expand luxury offerings in 2026, citing strong Q4 performance. Conversions climbed 13% in Q4 2025 to a record 2,815 projects, reflecting growing importance for brands such as Hilton and IHG.

• Weak nonresidential building construction activity may soften demand for architectural paints. Construction spending for nonresidential buildings is expected to remain sluggish in 2026 and 2027, according to the latest American Institute of Architects’ (AIA) Consensus Construction Forecast. Spending on nonresidential building construction is expected to rise 1% in 2026 and 2.2% in 2027. Through 2027, commercial facility growth will be led by data centers, with spending increasing 26.3% in 2026 and 16.5% in 2027. However, offices are expected to see a sharp decline in spending over the forecast period, while warehouse and retail will see weak growth this year and modest gains in 2027. Manufacturing construction spending will fall 3.9% in 2026 and drop 2.8% next year. Spending on institutional projects will grow 2.7% this year, and 2.8% in 2027, led by steady growth in the health sector, but educational, and amusement and recreation project spending will be flat.
• Contractors are entering 2026 with subdued expectations as economic uncertainty, tariffs, immigration enforcement, and persistent labor shortages weigh on confidence, even as demand for data centers and power projects remains strong. The Associated General Contractors of America’s latest outlook shows contractors are optimistic about data center growth, with 65% expecting the market to grow. Still, contractor sentiment regarding education, lodging, office, and retail construction all declined sharply compared to last year. Many firms report project delays or cancellations due to financing challenges and rising material and labor costs, and more than 80% struggle to fill both craft and salaried positions.