Even as it remains the single strongest area in new construction, could pushback from voters slow down the pace of new building?
The latest Associated Builders and Contractors analysis of Census Bureau data shows that spending on data center construction jumped year-over-year 8.6 percent in September, the most recent month available. This is in contrast to just a minimal 1.1 percent increase in private nonresidential construction spending for the same period.
It’s the sixth consecutive monthly gain for the overall nonresidential category, according to Anirban Basu, ABC chief economist. “As has been the case for several months, data centers accounted for virtually all of that increase,” said Basu. “Excluding data centers and the closely related power category, nonresidential spending actually fell in September.”
Basu added that spending in the overall non-residential category since May has grown at a 217 percent annualized rate.
But in the midterm elections earlier this month, while data center construction was not on the ballot, candidates who supported a slowdown in building generally won. How this will translate into actual new construction remains to be seen and could also be impacted by AI and data companies themselves saying they may look at dialing back building new centers.
For the time being, most observers believe the surge in data center building will continue. Ken Simonson, chief economist for the Associated General Contractors, said that other factors like treasury yields and raw material costs are likely to result in momentum continuing for AI-related projects for at least the next several months.
