Market Analysis – May 2026
Our Market Analysis reports include a Monthly Snapshot, where we take a focused look at a topic of current relevance – this month, data centers – alongside our data dashboards, which are a standardized set of key metrics we track and update each month to provide a steady view of market conditions. Together, they provide a clear and concise view of the trends shaping the construction industry, combining timely insight with consistent data.
U.S. Data Center Construction Market Analysis
The U.S. data center construction market has rapidly evolved into one of the most dynamic segments within the broader construction industry, driven by accelerating demand for cloud computing, artificial intelligence (AI), and digital infrastructure. Over the past five years, the sector has transitioned from steady expansion into a period of hyper-growth, followed more recently by a phase defined by infrastructure constraints rather than capital limitations. Construction spending has increased significantly since 2020, reaching record levels in 2024 and 2025, and even surpassing traditional commercial asset classes such as office development. This growth reflects the critical role data centers now play in supporting the digital economy.
A market expanding into one of construction’s most dynamic segments.
In terms of overall market size, U.S. data center construction reached an estimated value of approximately $90–$95 billion in 2025, with long-term projections indicating continued double-digit annual growth. This expansion has been largely fueled by hyperscale demand, particularly from major technology companies investing heavily in infrastructure to support cloud services and AI workloads.
Scale is now measured in power capacity, not square footage.
Beyond sheer dollar value, the size and scale of data center developments have increased significantly, with projects now measured in power capacity rather than just square footage. Individual facilities that historically operated in the 10–50 megawatt (MW) range are increasingly being replaced by large-scale campuses ranging from 100 MW to 500 MW.
At the upper end, hyperscale developments are beginning to approach gigawatt (GW) scale, with multi-phase campuses planned to deliver 1 GW or more of capacity over time. This shift toward megawatt- to gigawatt-scale infrastructure reflects the exponential growth in AI and cloud computing demand, fundamentally reshaping both the physical footprint and infrastructure requirements of the data center construction market.
The rapid expansion of the artificial intelligence industry is creating widespread resource shortages… as companies invest heavily in data centers.
Chris Adams Senior Director, Cumming Group
Three groups dominate the competitive landscape.
The competitive landscape is dominated by three primary groups: hyperscale technology firms, colocation providers, and institutional developers. These groups are supported by a network of contractors, engineering firms, and capital investors specializing in mission-critical infrastructure. Together, they have driven unprecedented levels of investment, with total capital commitments reaching into the hundreds of billions annually.
Hyperscalers — large technology companies including Amazon, Microsoft, Google, and Meta — account for a substantial share of new construction activity, often developing large-scale campuses with capacities exceeding tens of megawatts per facility.
Colocation providers such as Equinix, Digital Realty, and CyrusOne continue to expand their footprints to serve enterprise clients requiring flexible and scalable data solutions.
Established markets are constrained. The map is shifting.
Geographically, data center development in the United States has historically been concentrated in a handful of core markets. Northern Virginia remains the largest and most established hub globally, benefiting from its dense fiber network, proximity to government infrastructure, and mature ecosystem.
Den primary markets facing capacity limits include Northern Virginia, Dallas–Fort Worth, Atlanta, Chicago, Phoenix, Silicon Valley, and the New York Tri-State area.
However, as these markets face increasing constraints related to land availability, power capacity, and regulatory pressures, development activity has begun to shift toward secondary and emerging regions. States such as Texas, along with parts of the Midwest and Mountain West, are experiencing increased interest due to their relative advantages in land availability and energy access. This geographic diversification represents a significant shift in the industry, as developers prioritize scalability and infrastructure readiness over proximity to traditional network hubs.
The constraint is now infrastructure, not capital.
The current data center market is increasingly shaped by development constraints, with power availability emerging as the primary bottleneck due to limited grid capacity and long utility upgrade timelines. Additional challenges—including supply chain disruptions for key equipment, stricter permitting and environmental scrutiny, rising construction costs, and labor shortages—have led to delays and reduced project execution, with a significant share of planned developments pushed beyond original timelines.
At the same time, growing state and local pushback has become an increasingly important constraint. Communities and policymakers are raising concerns around high energy consumption, water usage for cooling, land use impacts, and the perceived imbalance between tax incentives and local economic benefits. In some regions, this has resulted in zoning restrictions, permitting delays, moratoriums, or the introduction of stricter regulatory requirements, further extending project timelines and increasing development risk.
As a result, the development lifecycle has shifted, with site selection now driven largely by access to reliable and scalable power infrastructure, prompting developers to prioritize regions with favorable energy conditions and accelerating geographic diversification across the market. Industry estimates suggest that a significant portion of planned projects for 2025 and 2026 have been delayed, with some sources indicating that nearly half of announced projects may not proceed on their original timelines. This has reduced the conversion rate from planned to active construction, even as overall demand remains strong.
The long-term outlook remains highly positive.
Looking ahead, the long-term outlook for the U.S. data center construction market remains highly positive, despite near-term constraints. Demand is expected to continue growing, driven by ongoing digital transformation, cloud adoption, and the expansion of AI technologies.
However, the pace of new construction is likely to remain moderate in the short term due to infrastructure bottlenecks. Future growth will increasingly depend on the industry’s ability to address power limitations, streamline permitting processes, and adapt to evolving regulatory and community expectations.
Construction Data
Live data on commodities, diesel pricing, construction employment, and architectural billings — key indicators for data center construction.