Data centers have earned significant praise for stabilizing the U.S. construction industry and providing an anchor for the broader economy in 2025. In many ways, this hype is justified, as construction spending on these critical infrastructure hubs has skyrocketed from less than $10 billion in 2020 to more than $40 billion as of July 2025.
The Critical Boost
The timing of this surge has been pivotal. Since the start of 2024, data center spending has ballooned by $16 billion, offsetting a dramatic $55 billion decline across virtually every other private nonresidential segment. This growth is also benefiting a broad cross-section of the industry, with more than 20% of Association of Builders and Contractors (ABC) members currently contracted for data center work—a sharp contrast to the highly concentrated manufacturing construction boom of 2022-2024.
The Hype Check: A Look at the Total Picture
Despite the astronomical growth, the narrative around the data center construction boom is somewhat overblown. Even at its current peak, this segment accounts for just over 5% of private nonresidential construction spending (and less than 2% of total construction spending).
This share remains relatively minor compared to recent construction surges, such as the computer/electronic manufacturing boom, which peaked at nearly 17% of private nonresidential spending in 2024, or the warehouse construction frenzy, which reached about 11% in August 2023.
Why the Massive Capex Numbers Don’t Match Construction Spending
The modest market share often perplexes analysts who see headlines about “hyperscalers” investing staggering capital expenditure (capex) sums—estimated to be over $250 billion in 2024 and exceeding $300 billion in 2025.
The discrepancy lies in defining what those capex numbers actually cover:
- Core vs. Content: The construction of a data center’s powered core and shell (the physical building) accounts for only an estimated 25% to 30% of total data center development costs. The majority of the spending goes toward expensive equipment that fills the facility.
- Equipment Refreshes: The reported capex numbers also include the cost of updating equipment at existing data centers, such as servers that are typically refreshed every three to four years.
A Powerful Caveat: The Power Play
One crucial factor is often overlooked: The data center boom is undoubtedly fueling a related construction surge in power infrastructure. Data centers, while currently accounting for only about 3% of U.S. power consumption, are projected to drive anywhere from 20% to 60% of the nation’s load growth over the next five years. This enormous demand is generating significant, power-related construction activity outside the narrow data center subsegment.
The Upshot
Data centers are providing the construction industry with essential momentum during a challenging economic period. However, the scale of the boom—as it narrowly relates to construction—is often exaggerated due to the conflation with the massive overall capital expenditure figures. In terms of dollar volume and share of total construction, the current data center surge is, for now, smaller than the warehouse construction boom that occurred from 2020 to 2023.