Data Centers Are Carrying Construction While Factories Fall 20%

Volume is concentrating in one asset class while input inflation hits every project. The decliner, factories, is still about twice the size of data centers.

Back-solving the rounded percentages, data centers added roughly $36B of annualized spend over twelve months while factories gave up roughly $41B (derived). Nonresidential volume is rotating, not just growing.

Eleven of sixteen nonresidential categories rose in August, per Construction Dive. ABC's economist said gains should narrow to data centers and power, citing materials, labor and borrowing costs.

A project outside those two categories has no volume tailwind but still faces a 10% materials index and 9.4% services inflation. Whether it is also competing with data center work for trades and equipment is not measured by this data.

Implications

Do not carry one blended escalation percentage on non-data-center budgets. Price escalation by trade, lock procurement early on long-lead items, and test bids against what trades can earn on data center and power work. Lenders should re-check contingency and interest reserves on construction loans written before this cost run.

Flags: Census figures are preliminary and revised. The $36B and $41B swings are CRE360 derivations from rounded percentages. Materials and services inflation figures are as cited by Wolf Street, not independently checked against the BLS release. ABC's '149% annualized since March' figure is a short-window annualization and is not used.