Amid issues of a knowledge heart slowdown or perhaps a bubble, contractors on the bottom are nonetheless buried in early-stage exercise and navigating extra challenge complexity than ever.
Funding has poured into creating new large knowledge facilities in 2025. The sector accounted for greater than 70% of the increase in non-public nonresidential development spending between March 2024 and March 2025. In the meantime, planning on these initiatives has largely bolstered overall construction planning this yr, in line with Dodge Development Community.
However a latest pullback from some main tech gamers has raised issues about whether or not the sector can proceed this momentum.
For instance, Microsoft, one of many largest backers of the info heart development growth, recently paused work on each its $1 billion knowledge heart in Ohio and its $3.3 billion campus in Mount Nice, Wisconsin, in line with The Related Press. A New York Times article just lately posed the query of whether or not knowledge facilities are on the precipice of a bubble.
But different tech giants and chipmakers proceed to forecast robust demand for knowledge infrastructure regardless of these alerts.
For instance, Amazon unveiled plans to invest at least $20 billion on two knowledge heart amenities in Pennsylvania as just lately as June 9. That sort of funding displays broader momentum throughout the sector, mentioned John Arcello, superior know-how core market co-leader at DPR, a Redwood Metropolis, California-based basic contractor.
Key elements reminiscent of energy entry, land availability and velocity to market, all stay as aggressive benefits for areas wooing these builds, added Brett Helm, basic supervisor of the Southwest division at Graycor Development, an Oakbrook Terrace, Illinois-based basic contractor.
“Exercise could be very excessive. You see increasingly more contractors attempting to get within the knowledge heart enterprise,” mentioned Helm. “It’s nonetheless very, very viable.”
That sentiment holds throughout each main hubs and rising knowledge heart markets, mentioned Ike Keene, vp of business at Caddell Development, a Montgomery, Alabama-based basic contractor. Major hubs embody northern Virginia, Atlanta, Chicago and Phoenix, in line with a latest data center report from CBRE, a Dallas-based business actual property companies agency.
“Our knowledge heart shoppers are persevering with to maneuver ahead with new work,” mentioned Keene. “We’ve got witnessed a gentle progress mode within the knowledge heart hub areas, however are additionally seeing an uptick of latest work within the secondary markets.”
New entrants
Whereas skilled house owners proceed to construct aggressively, a wave of latest shoppers coming into the house is altering early-stage work, mentioned Chris Teddy, nationwide director of mission essential at Kansas Metropolis, Missouri-based JE Dunn Development. This inflow has just lately jammed preconstruction pipelines and positioned additional strain on contractors, he added.
“Preconstruction is extra slowed down than we’ve seen in a very long time, as new gamers work to get a pulse in the marketplace to grasp what it really takes,” mentioned Teddy. “As they transfer additional upstream, it’s created added pressure on our preconstruction workforce as they attempt to assist these newcomers perceive the way to deal with the market.”
Nonetheless, even with this pressure, exercise continues to growth.
Teddy mentioned power constraints are pushing builders into new geographic markets and prompting revolutionary infrastructure options, reminiscent of onsite era or devoted substations.
“The information heart market continues to achieve momentum, exhibiting no indicators of slowing down as demand reaches an all-time excessive,” mentioned Teddy. “The tempo of improvement is barely accelerating.”
Assembly resistance
Different builders echoed that optimism, however pointed to a rising record of headwinds.
For example, lengthy tools lead instances, energy entry points and labor shortages are forcing extra strategic planning throughout the board, mentioned Arcello.
“The final sentiment within the knowledge heart development business proper now’s cautiously optimistic,” mentioned Arcello. “We’re seeing robust progress pushed by the speedy acceleration of AI and the insatiable demand for cloud computing.”
Arcello mentioned shoppers are actually bringing in contractors sooner than ever to assist consider website circumstances, entitlement dangers, power procurement and utility interconnection timelines.
“We’re seeing robust exercise within the early planning levels. Preconstruction companies and capabilities have turn into a real differentiator,” mentioned Arcello. “Early engagement is essential to remain on observe.”
That aligns with Keene’s expertise, who added the necessity for accurate cost forecasting has grown considerably. That’s very true as new tariffs add a recent layer of volatility to materials costs, mentioned Keene.
“The newly adopted tariffs have turn into a new variable in cost control,” mentioned Keene. “We’re adapting daily for correct present and future pricing buildings to help our shoppers in forecasting for the longer term.”
To assist keep forward, contractors are turning to prefabrication extra aggressively. On distant websites, Arcello mentioned groups are more and more constructing parts offsite in labor-rich areas and transporting them to initiatives. That helps ease expert commerce constraints and reduce rework, he mentioned.
In the meantime, procurement has turn into a battleground. Tools reminiscent of transformers, switchgear and uninterruptible energy provide methods can now carry lead instances that exceed 60 weeks, and costs for copper, aluminum and specialty mechanical gear stay unstable. That’s pushed contractors to lock in packages earlier, mentioned Arcello.
But, total, the info heart development market appears solely to have gained momentum in 2025, contractors say.
“There’s no query that demand for knowledge heart development is booming,” mentioned Teddy. “With a lot exercise, remaining diligent on procurement and preconstruction is extra vital than ever. Getting forward of provide chain constraints and value volatility could make all of the distinction.”
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