Data Center Boom Drives Construction Gains, But Costs and Power Access Threaten Momentum
According to Construction Dive, construction backlog reached a 10-month high in April and planning activity remains strong, but industry analysts warn that rising input costs and resistance to data center development could slow the pace. Gordian program manager Adam Raimond told the publication that material input costs are up 4% to 7% since the start of the year, driven by tariff-sensitive metals, lumber, and rising fuel and transportation costs. Moody’s director of commercial real estate research Ermengarde Jabir noted that municipal pushback and access to power pose real risks to future data center development.
What It Means for Subcontractors
- Material bids need buffer room. With input costs up 4% to 7% year-to-date and unlikely to reverse, subcontractors pricing data center and industrial work should build in escalation clauses to protect margins.
- Data center adjacency work is a near-term opportunity, but watch for delays in regulated utility territories where power access is constrained or local opposition is growing.
- Fuel price relief could slow cost increases in drywall and concrete, according to Raimond, so tracking diesel trends may give field estimators an early read on where input prices head next.
