2026 Data Center Construction Forecast — What's Coming Next
The data center construction market enters 2026 on an unprecedented growth trajectory. After hitting an estimated $32 billion in construction spending in 2025 — already a record — the 2026 forecast points to $35 billion or higher, with the potential to reach $40 billion if AI infrastructure investment accelerates as announced.
This article synthesizes the best available data on where data center construction is headed through 2026 and into 2027-2028. For contractors, subcontractors, suppliers, and investors in the construction industry, these numbers define the single largest growth opportunity in commercial construction.
The 2026 Market Size Forecast
Multiple data sources converge on a 2026 U.S. data center construction spending range of $33-38 billion:
| Source | 2025 Estimate | 2026 Forecast | Growth Rate |
|---|---|---|---|
| Turner & Townsend | $31B | $35B | +13% |
| JLL Data Center Outlook | $33B | $38B | +15% |
| CBRE Data Center Report | $30B | $34B | +13% |
| Dodge Construction Network | $32B | $36B | +12% |
| Buildermuse Composite | $32B | $35B | +10-15% |
Our composite forecast of $35B represents a conservative consensus. The upside scenario — $38-40B — would materialize if AI infrastructure investment accelerates beyond current commitments, if power grid capacity constraints ease faster than expected, or if state incentive programs attract additional international investment.
The downside scenario — $30-32B (flat growth) — would occur if interest rates rise significantly, if several major projects are delayed by permitting challenges, or if a significant economic downturn reduces enterprise IT spending. Even this downside scenario represents a historically massive market.
For context, the construction spending forecast for the broader market shows data centers growing faster than any other commercial construction category, now representing approximately 15-18% of total commercial construction spending — up from less than 5% a decade ago.
The Geographic Shift — Midwest and Southeast Surge
The most important geographic trend in data center construction is the shift away from established East Coast markets (primarily Northern Virginia) toward the Midwest and Southeast. This shift is driven by three factors:
Power Availability
Northern Virginia, the world's largest data center market, is hitting power capacity limits. Dominion Energy has warned that it cannot provide adequate electricity for all proposed data centers in its service territory without major grid investments that will take 5-7 years to complete. New data center interconnection requests in Loudoun County now face 3-5 year wait times for power delivery.
Meanwhile, Midwest utilities — AEP Ohio, Duke Energy Indiana, MidAmerican Energy (Iowa), OPPD (Nebraska) — have available power generation capacity and the ability to build new transmission infrastructure on 2-3 year timelines. This power advantage is redirecting tens of billions in data center investment.
2026 construction spending by region (estimated):
| Region | 2025 Spending | 2026 Forecast | Growth |
|---|---|---|---|
| Virginia/Mid-Atlantic | $8.5B | $8.0B | -6% |
| Texas | $5.5B | $7.0B | +27% |
| Midwest (OH, IN, IA, NE, WI) | $4.0B | $6.5B | +63% |
| Southeast (GA, TN, NC, SC) | $3.5B | $5.5B | +57% |
| West (AZ, NV, UT, OR, WA) | $5.0B | $5.0B | flat |
| Other states | $5.5B | $3.0B | -45% |
The Midwest and Southeast combined are forecast to account for $12B in data center construction in 2026 — more than Virginia for the first time in the history of the industry.
Incentive Competition
As covered in our state tax incentive guide, states are competing aggressively for data center investment. Indiana, Ohio, Georgia, and Tennessee have all enhanced their incentive programs within the past 18 months. The gap between the most competitive states (where incentives can reduce project costs by $50-275M) and states without meaningful programs is driving site selection toward incentive-rich markets.
Land and Labor Availability
Virginia's Loudoun County has limited remaining land suitable for data center development, and labor competition has driven wages to premium levels that erode project economics. Midwest and Southeast markets offer cheaper land (often 50-75% less per acre), lower construction labor costs, and less competition for skilled trades.
The Technology Shift — Liquid Cooling Goes Mainstream
The most significant technology change in data center construction for 2026-2027 is the transition from air cooling to liquid cooling as the standard approach for new facilities.
2025: Approximately 15-20% of new data center construction included direct liquid cooling infrastructure 2026 forecast: 35-45% of new construction will include liquid cooling 2027 forecast: 60-70% of new construction will include liquid cooling 2028+: Liquid cooling will be the default for new data centers serving AI workloads
This transition has major implications for the construction industry:
New trade skills required: Liquid cooling installation requires precision piping skills not typically found in data center construction crews. Contractors need to hire or train workers with pharmaceutical or semiconductor piping experience.
Changed mechanical scope: The mechanical construction scope shifts from traditional HVAC (air handlers, ductwork, raised floor air distribution) to precision piping (manifolds, CDUs, dry coolers). This changes the trade mix on projects and may favor different mechanical subcontractors.
Higher construction costs: Liquid cooling infrastructure costs 30-50% more per megawatt than traditional air cooling, but reduces ongoing operating costs (particularly water consumption). The net effect is higher construction spending per MW of capacity.
Reduced water consumption: As liquid cooling systems reject heat through air-cooled dry coolers rather than evaporative cooling towers, water consumption drops dramatically. This removes a significant permitting barrier in water-stressed markets like Arizona and Oregon.
The Power Pipeline — Can the Grid Keep Up?
The single largest risk to the data center construction forecast is power grid capacity. Data centers are voracious consumers of electricity, and the U.S. power grid — already strained by electrification trends in transportation and industry — faces unprecedented demand growth from data center development.
Power demand from data centers:
- 2024: Approximately 21 GW of U.S. data center load
- 2025: Approximately 28 GW
- 2026 forecast: 35-40 GW
- 2028 forecast: 50-65 GW
To support this growth, utilities need to add 25-40 GW of new generating capacity and the transmission infrastructure to deliver it to data center sites. This requires:
- New natural gas power plants ($800M-$1.2B each, 18-36 month construction)
- New renewable energy installations (solar at $1-1.5M/MW, wind at $1.3-1.8M/MW)
- Transmission line upgrades ($2-5M per mile, 3-7 year permitting and construction)
- New substations ($20-50M each, 18-30 month construction)
The electric grid construction analysis details the broader grid upgrade picture. Data center demand is now the single largest driver of U.S. power grid investment.
If utility capacity does not keep pace with data center demand, the result will be project delays — not project cancellations. The demand for AI computing power is too strong to defer permanently. But delays of 12-24 months are increasingly common in power-constrained markets, and these delays will spread construction spending over a longer period, potentially dampening the near-term growth rate while extending the market cycle.
Key Metrics to Watch in 2026
These are the leading indicators that will signal whether the market is tracking above or below forecast:
Permit Volume and MW
Total megawatts of data center capacity permitted in 2026 is the single best predictor of construction spending 12-18 months later. Q1 2026 permit volume (tracked in our permit database) is running approximately 20% above Q1 2025 levels, consistent with the $35B spending forecast.
Utility Interconnection Queue
The number of data center interconnection requests in utility queues is a forward-looking indicator. AEP Ohio's queue has grown from 3 GW to over 8 GW in 18 months. Dominion Energy Virginia has 30+ GW of data center requests. These queues will be worked through over 3-5 years, providing visibility into long-term construction demand.
Switchgear Lead Times
Medium voltage switchgear lead times are a proxy for overall data center equipment demand. Current lead times of 40-60 weeks are at historical highs. If lead times extend further, it signals demand exceeding supply — bullish for construction spending but bearish for on-time project delivery.
Copper Prices
Copper prices reflect underlying demand for electrical construction. The 18% copper price increase in the past 12 months is partly driven by data center demand. Continued price increases would confirm strong construction activity, though they also compress contractor margins.
Labor Availability
Skilled trade worker availability — particularly electricians, pipefitters, and commissioning specialists — is the binding constraint in many markets. Wage escalation above 5% annually would signal extreme labor tightness and potential project delays.
The 2027-2028 Outlook
Looking beyond 2026, the data center construction market appears positioned for continued expansion:
2027 forecast: $40-50B
The projects permitted in 2026 will drive construction spending through 2027 and into 2028. If the AI infrastructure investment commitments from hyperscalers materialize as announced, 2027 could see data center construction spending jump to $40-50B — roughly 50% above 2026 levels.
Key drivers for 2027:
- AI training facility construction reaches full scale
- Liquid cooling becomes the standard for new facilities
- Midwest and Southeast markets mature with established subcontractor bases
- Several multi-gigawatt campus developments move into active construction
- Next-generation GPU architectures (post B200) drive further power density increases
2028 forecast: $45-60B
By 2028, data center construction could represent 20-25% of total U.S. commercial construction spending. The market structure will be more mature, with established GC and subcontractor ecosystems in markets beyond Virginia and Texas.
Key factors for 2028:
- Edge data center construction adds a new market segment (smaller facilities closer to end users)
- Nuclear power for data centers begins construction (several SMR projects are targeting 2028-2030 completion)
- International hyperscaler investment in U.S. facilities (European and Asian companies building AI infrastructure on U.S. soil)
- Retrofit and upgrade market for existing data centers to support higher power densities
What This Means for Construction Firms
The data center construction market forecast through 2028 presents several strategic implications:
For General Contractors
The market is large enough to support 10-15 major GC firms, up from the current 6-8 dominant players. New entrants with strong project management capabilities, adequate bonding capacity, and willingness to invest in data center expertise have a window of opportunity. However, the market favors experienced firms — don't expect to win $500M projects without a track record of successful $50-100M data center deliveries.
For Electrical Subcontractors
Electrical is the largest trade scope in data center construction (35-45% of total cost) and faces the most severe labor shortage. Electrical contractors who can staff 100+ electricians on a single project, with medium voltage and commissioning capabilities, will have more work than they can handle through 2028. The limiting factor is qualified workforce, not project availability.
For Mechanical Subcontractors
The transition from air cooling to liquid cooling is changing the required skill set. Traditional HVAC contractors need to add precision piping capabilities. Contractors who can bridge the gap between HVAC and process piping will find a rapidly growing market.
For Material Suppliers
Long-lead equipment suppliers — switchgear, generators, UPS, transformers, chillers — are the bottleneck in data center construction. Manufacturing capacity expansions underway by Eaton, Schneider, Caterpillar, and others will take 2-3 years to fully come online. In the meantime, suppliers with available capacity and shorter lead times have significant pricing power.
For Workforce Development
The data center construction boom will require an estimated 50,000-80,000 additional skilled trade workers over the next three years. Apprenticeship programs, trade schools, and workforce development organizations that can train workers in data center-specific skills — medium voltage electrical, precision piping, commissioning, and controls — will find strong demand from employers willing to invest in training partnerships.
Bottom Line
The 2026 data center construction forecast of $35B represents the beginning, not the peak, of the largest sustained buildout in commercial construction history. The combination of AI infrastructure demand, geographic market expansion, technology evolution (liquid cooling), and massive corporate capital commitments points to a market that will grow to $50B+ by 2028.
For construction firms, the strategic question is not whether to participate in this market — it's how much to invest, how quickly to scale, and where to position geographically. The firms that make smart, aggressive investments now will capture disproportionate returns for the remainder of this decade.
The data center construction boom is real, it's accelerating, and it's the defining opportunity of this generation of construction professionals. Position accordingly.
READ NEXT: Data Center Construction Costs Per Square Foot — 2026 Breakdown
FAQ
Q: The Midwest is forecast to grow 63% to $6.5B in 2026 — which states within that region are actually pulling permits and where should a contractor be licensed right now? A: Ohio, Indiana, and Iowa are driving the bulk of Midwest growth. Columbus (AEP Ohio territory) and Indianapolis (Duke Energy Indiana territory) have the deepest immediate pipelines. AEP Ohio's interconnection queue has already grown from 3 GW to over 8 GW in 18 months, which signals projects in active development. Getting licensed in Ohio and Indiana before the mid-2026 construction surge begins positions a contractor ahead of the labor competition.
Q: Liquid cooling is forecast to jump from 15-20% of new construction in 2025 to 35-45% in 2026 — how should a mechanical contractor adjust their crew mix right now to capture that shift? A: The shift means the mechanical scope is moving from traditional air handlers and ductwork toward precision piping, CDUs, and dry coolers. Start by identifying 3-5 pipefitters with pharmaceutical or semiconductor piping backgrounds — that clean-room discipline transfers directly to coolant distribution unit connections. Budget for BICSI or vendor-specific liquid cooling training ($2K-5K per technician) and target your first liquid cooling scope on a smaller colocation project to build documentation before bidding a hyperscale package.
Q: Switchgear lead times are at 40-60 weeks historically high — how does that affect a contractor's schedule management on a 2026 project? A: At 40-60 weeks lead time, medium voltage switchgear ordered today won't arrive until early-to-mid 2027. On a project breaking ground in mid-2026 with an 18-month schedule, that means switchgear must be ordered at or before permit issuance — not at GMP. Contractors should push for early procurement authority on long-lead electrical equipment as a contractual requirement, and verify the GC or owner has already placed orders before committing to a completion date.
Q: Virginia's data center construction is forecast to decline 6% to $8B in 2026 — does that mean a Virginia-based contractor should be actively pursuing work in other states? A: Yes, but the Virginia market itself is still $8B — enormous by any standard. The decline signals that the marginal new project is going elsewhere, not that Virginia is collapsing. A Virginia-based contractor should use their existing client relationships and data center resume to prequalify in Ohio, Indiana, and Georgia, where those same hyperscaler clients are building new campuses and actively need subs with proven data center track records. The relationships travel; Virginia credentials open Midwest doors.
