Five years ago, building data centers was a healthy but unremarkable corner of the US construction market. The sector posted a 98% compounded annual growth rate from 2021 to 2025.
As of April 2026, US data center construction spending reached a seasonally adjusted annual rate of $50.7 billion, according to ABC analysis of Census Bureau data. That figure represents a 28.1% increase year-over-year.
The numbers behind the boom
Year-to-date spending through October 2025 more than doubled the prior year’s figures, with full-year estimates exceeding $52 billion according to ConstructConnect data. By November 2025, year-to-date spending was up 138.6% over the same period in the previous year.
Mid-point construction costs jumped from $183 per square foot in 2020 to $415 per square foot in 2025. That’s nearly 18% compounded annual growth in costs alone, driven by supply-chain pressures, labor shortages, and the sheer complexity of modern facilities that need to house thousands of high-performance GPUs drawing enormous amounts of power.
In 2026, capital expenditures by the 14 largest public data center operators are projected near $750 billion, with the majority of that capacity located in the US. Amazon, Microsoft, Google, Meta, and Oracle are the heaviest spenders, each racing to build out the physical infrastructure needed to train and deploy increasingly large AI models while scaling their cloud platforms.
Why now, and why this fast
The obvious catalyst is artificial intelligence. Training a single frontier AI model can require tens of thousands of GPUs running for months inside facilities purpose-built for that workload. The power, cooling, and networking requirements are fundamentally different from the cloud computing infrastructure that drove the last wave of data center investment.
The geographic concentration tells its own story. Northern Virginia remains the largest data center market in the world, but capacity constraints there have pushed development into new corridors across Texas, the Midwest, and the Southeast. Power availability has become the primary bottleneck: developers are now competing for grid connections the way homebuilders once competed for desirable lots.
Deals to revive retired nuclear plants, build dedicated natural gas facilities, or secure long-term renewable energy contracts have become standard features of major data center announcements.
What this means for markets and supply chains
The rapid rise in construction costs adds another layer of risk. At $415 per square foot, the economics of a new facility look very different than they did at $183 per square foot just five years ago. Operators who locked in earlier builds at lower costs have a structural advantage. Latecomers face tighter margins and longer payback periods, particularly if lease rates don’t keep pace with construction inflation.