Structural Steel and Precast Concrete Contractors NAICS 238120

Jan 7, 2026 - Data Center Boom May Overtake Office Construction

• Commercial construction is being reshaped by the AI-driven surge in data center development, which is on track to overtake office construction as demand for computing power accelerates, according to The Wall Street Journal. Investors are pouring money into these projects because data centers delivered industry-leading returns in 2024, and hyperscalers such as Meta, Amazon, and Oracle are increasingly leasing space rather than building it themselves. JLL forecasts up to $1 trillion in North American data center construction between 2025 and 2030, but the boom brings new risks for builders and developers. Projects face labor shortages, tariff-strained supply chains, and power access challenges that can trigger costly lease penalties or cancellations. As commercial real estate shifts away from offices and toward AI infrastructure, construction firms are more exposed to a single, technically demanding asset class whose performance hinges on the stability of the AI sector.
• Demand for building design services declined in November from the prior month, marking the thirteenth consecutive month of weak architectural billings, according to a December report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 45.3 compared to October's reading of 47.6. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 51.4 in November from 54.8 in October, and the new design contracts index dropped to 42.7 from 47.1. The AIA’s Chief Economist, Kermit Baker said, "Weakness in business conditions at architecture firms continues to be widespread, with declining billings across all major specializations and in every region except the Midwest. However, inquiries for new projects continued to increase, and design activity at firms in the Midwest – a region that traditionally has had a disproportionate share of manufacturing activity – appears to have hit its bottom for this cycle and is expected to continue to improve."

• The total value of nonresidential building construction starts in November fell 13.4% compared to October, according to Dodge Construction Network. Commercial starts declined 25.8. Office and data center starts dropped 40.5% and hotels were down 33.2%. Nonresidential building segments that posted growth in November included parking garages (+32.1%), retail stores (+8.3%), and warehouses (+6.4%). Institutional starts grew 11.4% as gains in public and educational building starts offset declines in amusement and dormitory starts. Manufacturing starts remained volatile in November, declining 50.7% from October levels.
• North American construction and engineering spending in 2026 is expected to rise 1% after decreasing an estimated 1% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Commercial construction spending is forecast to decline by 4% in 2026 as retail store closures surpass openings for the first time in a decade and warehouse vacancies remain high. Lodging construction is expected to decline by 2% in 2026, amid sluggish business travel growth and as financing conditions and maturing debt pose headwinds. Even as vacancy rates remain high, office construction spending growth will rise 7% in 2026, driven by data centers and converting offices to multifamily. Federal funding cuts are projected to result in flat educational construction spending in 2026, while healthcare projects are expected to see a 3% increase.