Data Centers Prop Up Construction Spending as Offices, Warehouses Slide
According to Construction Dive, private nonresidential construction spending fell 3.8% in May, with data center work continuing to power the majority of growth while other segments weaken. Contractors with data center contracts carry an average backlog of 11.6 months, about three months longer than firms without that work, according to ABC chief economist Anirban Basu. Warehouse construction spending has fallen for three consecutive months and is down 8.5% year over year, while the general office category is down 11.9% since May 2025. Public construction spending, such as highways and water infrastructure, has fared better this year, and AGC officials are urging Congress to pass a new highway and transportation bill before the current law expires September 30.
What It Means for Subcontractors
- Firms without data center contracts should expect a leaner private-sector bidding environment, particularly in warehouse and office construction, and may want to look toward public infrastructure work as a more stable alternative.
- The 11.6-month average backlog for data center contractors versus a shorter runway elsewhere underscores the value of diversifying into mission-critical and hyperscale work where possible.
- With highway funding authorization expiring September 30, subcontractors reliant on public infrastructure work should watch Congress closely, as AGC warns that segment is currently offsetting weakness elsewhere in the market.
