Data centers are driving our construction economy. They represented more than 65.8 billion in construction spending in 2025, and the rate of their construction continues to accelerate. Building a data center consumes huge quantities of steel, and much of this steel is in the form of steel framing and accessories. Many argue that this pace of construction is not sustainable, but the question is: when will this slow or end? And how will data center construction change over the next few months and years?

In the current construction economy, data centers and other megaprojects are masking what would otherwise be a construction recession. With immigration policy exacerbating an already high shortage of construction workers, and high interest rates reducing investment in buildings, most sectors of construction are softening. The exceptions are projects still being funded by the Infrastructure Investment and Jobs Act from 2021, and data centers. Earlier this week I visited a data center construction project, and saw what much of the hype was about: huge areas with steel everywhere: not just the steel framing, but strut ceiling support systems, steel conduit and piping for cooling systems, steel racks and cabinets for electronics, even steel blocking panels for through-wall penetrations.

This will keep the demand for steel high through 2026 and beyond. Most of the components I saw were made from galvanized sheet steel: from the roof and floor deck to conduit to the strut to the electrical cabinets to the wall studs. But there was much steel in other components: heavy steel pipes for sprinkler and cooling systems, and structural steel joists and columns for the warehouse-style building. Thankfully, most of this steel is domestically produced. But we still rely on imported steel to supply almost a quarter of our demand: not only in construction, but in automotive, packaging, and other industries. Tariffs will continue to affect steel prices, but I don’t expect much change in the tariff picture with respect to steel in 2026. The 232 tariffs will likely remain in place at current levels for the next two to three years.

What Comprises a Data Center?

Data centers are hubs of electronic storage and processing equipment that support the computer requirements of modern life. This includes what we often refer to as cloud storage, but also processing of functions required to power everything from lighting systems to thermostats to security systems. Even before the recent explosive growth of artificial intelligence, data centers have been used to store and process information that powers our cell phones, online systems, and even household appliances. With new demands for faster and more complex computing, and the worldwide race for AI domination, the need for large, powerful data centers has outstripped projections from just a few years ago. Because the companies investing in this race are largely not affected by high interest rates, they can spend huge amounts of capital to secure their place in the competitive AI marketplace. The result has been multi-billion-dollar megaprojects, with construction spending on these projects at almost $5 billion per month as of November 2025.

What Supports a Data Center?

Even after construction is complete, data centers consume huge amounts of power, and depending on the type of equipment cooling, large amounts of water. This can put strains on local power grids and networks, so many data center construction projects include onsite power generation capabilities. From solar farms, battery backups, and even one center planning nuclear generation, these data centers will come online before the power grid can catch up with their energy consumption requirements, so these centers have created their own power sources.

In some cases, these are temporary but the latest wave of data centers include onsite power generation as part of their plans. At the data center site I visited, the area on the east side of the main building was dedicated to power generation, and the area on the south side dedicated to cooling. And for this particular site, they had a bank of about a dozen tractor-trailer sized temporary propane heaters that kept the inside temperatures bearable while outside temperatures dipped into the low teens.

The cooling system for this particular center was water-based: with cast-iron pipes and valves almost as tall as I am, running chilled water to and from the electrical equipment. The chillers that cooled this water were being installed on several acres south of the main facility, with heavy insulation enveloping the pipes both inside and outside the main building. Although much of the computing electronics had yet to be installed, the plans showed two levels of switchgear supporting the main data processing, and as I watched electricians were installing and testing some of this switching equipment.

There were literally miles of conduit, some several inches in diameter, winding snakelike throughout the facility, with large racks several feet wide supporting the dead load of banks of conduit. As one might imagine, sequencing between the drywall construction and the multiple electric and mechanical systems required a great deal of planning, and shaftwall was used in several areas where one-sided rated wall construction was required.

Where Are Data Centers?

With the explosion of data center demand, they are seemingly everywhere, but in fact are concentrated in a few key areas. Construction location depends not only on demand, but on location of available large parcels of land, power sources, and other resources such as network connectivity and water for cooling systems. Favorable tax arrangements with state and local governments also create location incentives, and pushback from communities who do not want large power or water consumers in their backyards have blocked some data center construction.

Traditionally, there has been a high concentration of data centers in northern Virginia near Washington, DC: since this is adjacent to a confluence of high-speed data transmission lines, as well as high-demand networks supporting defense and government. But new, large data center construction supporting AI has largely been across the South, with several megaprojects in Texas, Louisiana, and Georgia.

In the last 12 months, construction spending in Louisiana and Texas has outpaced Virginia, with dollar values of data center starts in those three states at $12.5 billion, $11.0 billion, and $7.2 billion, respectively. For 2026, Texas is expected to take the lead in data center and energy project construction spending.

Although it has traditionally been a tight-knit group of large contractors that have been securing much of this work, some of the steel framing has been either self-performed by larger general contractors or subbed out to multiple specialty subcontractors. And there is a niche type of data centers that is helping support the medium-sized project category: edge data centers.

What Are Edge Data Centers?

Edge data centers are smaller, concentrated data processing facilities, located closer to the networks where data demand is highest. Because of this location near populated areas, these centers are smaller and not as sprawling as the megaprojects built to support AI development. Edge data centers are still growing as demand for processing continues to grow. These centers need to be close to where data is generated and used, to reduce latency and processing time. This allows for processing of a large volume of data quickly, without having to access larger cloud storage.

The data center construction site of my recent visit was an edge data center project. Located just 14 miles from Wall Street in Manhattan, this center consisted of four stories of a repurposed manufacturing complex. Two stories consisted of switchgear, with the two upper stories providing the primary data processing. Even though the primary cooling system was water, the layout still had the warm aisle/cool aisle layout of a traditional air-cooled data center. The floor-to-ceiling height was still relatively tall but plenum pressures were not the 15 PSF often required with air-cooled systems. Much of the framing was accomplished with thinner nonstructural framing, with structural materials required for the larger openings and thinner (less than 6” stud) walls.

As both traditional and edge data centers continue to grow, I see the demand for data center construction not letting up through 2027 and beyond. Although electronics, cooling systems, and power systems may vary as new technologies are developed, demand for computer processing space will continue to grow over the next few years, and construction for data-hungry systems and communities will need to keep pace.

As United States companies fight for a leadership role in the race for AI development and use, the mega data centers and their supporting infrastructure will continue to be built. Steel framing and gypsum construction will continue to be the go-to materials for partition construction in these megaprojects, as steel continues to prove itself as a reliable, available, consistent and affordable construction material, that meets the varied demands of data center construction.