Data centers have rapidly reshaped the landscape of U.S. office construction, now representing a major share of spending and signaling a long-term shift in commercial real estate investment priorities. As of 2024, data centers accounted for 32% of new office construction spending in the U.S., a dramatic increase from just 5% a decade ago. Projections suggest their share could climb further to 40% by 2028—a testament to the rising influence of digital infrastructure in economic development. However, data centers remain a much smaller piece of the total non-residential commercial construction market, making up about 3% of all such spending in 2024.
The Boom in Office Construction Share
Over the last ten years, several market dynamics have combined to drive this remarkable growth. Originally a niche sector, data centers surged as digital transformation, remote work, and cloud adoption became critical business needs. The COVID-19 pandemic further accelerated this trend by prompting a “flight from office” among traditional tenants, while demand for cloud services and virtual collaboration soared. As a result, while conventional office spending has stagnated or declined, investment in data centers has grown sharply—by some measures, outpacing other office construction activities at over 200% growth rates since 2019.
Total Non-Residential Construction Perspective
Despite their prominent office market position, data centers represent only about 3% of the much larger non-residential commercial construction sector in 2024. Manufacturing, healthcare, education, and other infrastructure segments still command the bulk of overall spending. Nonetheless, data centers—together with manufacturing facilities—accounted for 94% of net growth in private non-residential construction spending in 2024, underscoring how this small but rapidly expanding category is disproportionately fueling overall sector momentum.
Market Drivers
Several powerful trends are behind the boom in data center investment:
- Explosive growth in data generation—driven by cloud computing, AI workloads, streaming, and Internet-connected devices—has made large-scale computing facilities a necessity for both Big Tech and a range of enterprises.
- Artificial intelligence, especially generative AI models, requires enormous compute and storage capacity, further raising infrastructure demand.
- Major tech companies, including hyperscalers like Amazon, Google, Microsoft, and new joint ventures such as OpenAI-Oracle, are leading the charge in building new, energy-efficient, and massive data centers across the country.
- Continued growth in e-commerce.
Outlook for 2028 and Beyond
Forecasts anticipate data center construction will continue to outpace other office segments, reaching nearly 40% of all new office construction spend by 2028. Geographically, markets with strong power infrastructure—such as Northern Virginia, Texas, and parts of the Southeast—are seeing the highest rates of expansion. With AI- and cloud-driven workloads still rising, data center growth is expected to remain one of the most significant trends in U.S. commercial development for years to come.
Tomorrow’s post will examine some of the specialized lighting needs of data centers.
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