AI Data Center Construction Surges 23%, Masking Contraction in Other U.S. Building Sectors
Miles Bennett
U.S. data-center construction spending jumped 23% year-on-year, yet factory building plunged 22% over the same period — AI infrastructure is papering over a broad slump across nearly every other segment of American construction.
How dominant is the data-center boom?
Data-center spending now accounts for 8% of total private non-residential construction, up 23% year-on-year.
Factory construction fell 22% in the same period, to an annualized $174 billion.
Anirban Basu, chief economist at the Associated Builders and Contractors, put it bluntly: "Beyond data centers, there is very little pushing construction forward."
This means → U.S. construction "growth" is standing on one leg — AI infrastructure — and that leg is dangerously narrow.
Why have factories stopped expanding?
The core issue is soaring costs. Non-residential building-material costs have risen over 55% since early 2020; steel and copper wire even more.
A real case: Mitchell Metal Products, a Wisconsin stamping shop, spent $727,000 on a comparable expansion in 2018. Last autumn the lowest bid came in at $2.1 million — far above its $1.2 million budget — and the project was scrapped.
In plain terms = the same building now costs nearly three times what it did six years ago. Many mid-sized manufacturers simply cannot afford to build.
Who is buying up all the equipment?
Transformer prices have risen roughly 70% over five years.
Order backlogs on some electrical equipment now stretch beyond two years, lengthening timelines and inflating costs further.
Thomas Murphy, VP at Power & Construction Group near Rochester, N.Y., said: "Any available equipment in the U.S. gets snapped up immediately."
This means → data centers and solar projects are competing with traditional manufacturers for the same pool of equipment and materials — and traditional builders are losing.
Is policy helping or hurting?
The Trump administration scrapped the automotive electrification target, stalling EV-factory construction.
Some chip-fabrication plants have slowed due to skilled-labor shortages and cost overruns.
Tariff policy creates a double bind: it aims to lure manufacturers back to the U.S. by raising import costs, but it also raises domestic building-material prices.
In plain terms = tariffs make imports expensive so companies want to build locally — but the materials to build locally got expensive too. What the left hand offers, the right hand takes back.
How long can AI infrastructure carry the load alone?
The pandemic-era boom in warehouse and factory construction, driven by e-commerce and supply-chain reshoring, has faded.
Basu noted that for manufacturers with overseas plants, "Is now the time to move the supply chain back? In many cases, the answer is no."
This reflects a hard reality: even with policy incentives, cost pressures are suppressing the will to reshore.
Whether AI data centers can keep propping up U.S. construction depends on two things: the pace at which Big Tech delivers on capital-spending promises, and whether building costs can be brought under control.
Content is for reference only, not financial advice.