Site Prep Contractors NAICS 238910

Jul 9, 2025 - – Data Center Demand Remains Strong

• Demand for data center construction remains steady, according to Construction Dive. Between March 2024 and March 2025, data centers accounted for more than 70% of spending growth in the nonresidential construction sector. According to real estate services firm CBRE, primary data center hub locations include northern Virginia, Atlanta, Chicago, and Phoenix, but developers are branching out to new geographic locations amid recent trends in onsite electricity generation and dedicated substations for data center electricity needs. While contractors are mostly optimistic about data center growth, challenges include long lead times for equipment (such as transformers, switchgear, and uninterruptible power supplies), adequate power access, labor shortages, and rising materials costs. Contractors with expertise in preconstruction services – including site condition evaluation, utility interconnection timelines, and entitlement risks – are in strong demand.
• High home prices and mortgage rates have priced many would-be homebuyers out of the market, creating robust pent-up demand that’s unlikely to be realized in the near term, according to The Wall Street Journal. In 2024, there were about 1.1 million first-time buyers, compared to an annual average of about 2.1 million over the last 20 years, according to the National Association of Realtors (NAR). To afford a median-priced new home today, a buyer would need an income of $127,000 compared to $79,000 for the same home in 2021, according to Harvard’s Joint Center for Housing Studies. To attract younger, first-time buyers, large builders with finance arms have offered mortgage-rate buydowns and discounts, which eat into profits. Industry watchers suggest that many first-time buyers may remain stuck on the sidelines, absent a significant drop in mortgage rates or a recession that pushes down home values.

• North American construction and engineering spending in 2025 is expected to grow by 1% after increasing an estimated 7% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. With growth of 32%, the data center sub-sector will lead 2025 nonresidential construction, followed by sewage and waste disposal (7% growth over 2024), amusement and recreation (+6%), water supply (+6%), educational (+4%), and public safety (+4%). Commercial construction spending is expected to decline 4% in 2025 amid a 4% drop in warehouse demand, which accounts for more than half of annual commercial spending. Lodging construction spending is forecast to fall by 3%, and stubbornly high office vacancies are expected to hold new office construction to 2% growth in 2025. Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 1% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 9% in 2025. In addition to strong spending on water and sewage projects, other segments of the infrastructure sector are projected to see spending increase in 2025, including power (+3%) and highway and street (+2%).
• New single-family home sales fell 13.7% month-over-month and were down 6.3% year-over-year in May 2025, according to the US Census Bureau. May’s total new home sales reached 623,000 units. According to Dow Jones estimates, Wall Street analysts had expected May sales to reach 695,000. In recent quarterly reports, some homebuilders said high interest rates and weaker consumer confidence weighed on demand. As sales of new homes remain soft, inventories of unsold homes are increasing. At the end of May, there were 507,000 new homes for sale, up 15% compared to May 2024. The number of unsold new homes in May was the highest since the summer of 2022, after the Federal Reserve began increasing interest rates.