Data center construction

Plans for data centers, construction’s hottest sector, continued to fly off drafting tables in April, while owners in other market segments mostly sat still, according to Dodge Construction Network. 

The Dodge Momentum Index grew 0.9% in April, almost exclusively on the back of data center ramp-ups. Without those projects moving forward, the DMI would have dropped 3%, while commercial planning would have fallen 2.3%. Preparations for institutional projects, which include education, life sciences and healthcare builds, fell 4.2% during the month. 

“Despite an uptick in April, the bulk of the DMI’s growth was driven by a surge in data center planning, while momentum in other nonresidential sectors lagged behind,” said Sarah Martin, associate director of forecasting at Boston-based Dodge Construction Network. “Owners and developers are navigating heightened economic and policy uncertainty, which likely bogged down much of this month’s planning activity.”  

The index tabulates the dollar value of nonresidential building projects entering the drawing stages each month, an indicator that leads actual construction spending by a full year. 

Still, while President Donald Trump’s tariff war with the rest of the world has spooked some construction project sponsors toward the sidelines, the measure of planning activity was up a healthy 22% compared to a year ago. Indeed, commercial segment planning was 20% higher than April 2024 and institutional preparations were 26% higher, compared to a weak showing last year.

But again, data center blueprints are dominating overall activity. Dodge said if it were to remove all data center projects going back to 2023, its yardstick would be up just 7% from a year ago, while commercial jobs would be down 1%.  

A total of 40 projects valued at $100 million or more entered planning throughout April, according to Dodge. Some of the largest were: 

• The $1.9 billion TA Realty Data Center campus in Dulles, Virginia.  
• The $900 million Powhatan Data Center Campus in Powhatan, Virginia
• The $493 million Revere High School in Revere, Massachusetts. 
• The $350 million QTS Data Center DFW2-DC3 in Lancaster, Texas.
• The $230 million Kaiser Permanente Sunnyside Medical Center Hospital Tower in Clackamas, Oregon.  
• The $203 million Kailua-Kona Hospital in Kaiminani, Hawaii.  

Dive Brief:

• Google continued to ratchet up spending on technical infrastructure to meet growing demand for cloud compute services during the first three months of the year. The tech giant reported capital expenditures of $17.2 billion, primarily in servers and data centers to support consumer and enterprise products, cloud services and AI research, CFO Anat Ashkenazi said during a Q1 2025 earnings call Thursday.
• The company plans to increase capital expenditures by more than 40% to roughly $75 billion this year, compared to $52.5 billion in 2024. “We exited the year in cloud specifically with more customer demand than we had capacity and that was the case this quarter as well,” Ashkenazi said. “We want to make sure we ramp up to support customer needs and customer demands.”
• Google saw its cloud division revenues increase 28% year over year to $12.3 billion, driven by core infrastructure and AI services. Operating income for Google Cloud, which reported its first profitable quarter two years ago, grew 142% to nearly $2.2 billion during the three months ending March 31.

Dive Insight:

AI is the driving force behind massive capital investments by Google and its two larger hyperscale competitors, AWS and Microsoft. The technology shaped the infrastructure used to train and deploy large language models and opened the floodgates for a fresh wave of data center spend.

Less than 24 hours after the earnings call, Google announced a $3 billion commitment to build out facilities in Virginia and Indiana. The company also created a $75 million AI training fund and launched an AI fundamentals training course, according to the Friday announcement.

Earlier this month, Google unveiled the seventh generation of its AI-optimized tensor processing unit, called Ironwood. The processor was designed to speed inference workloads and power an expanding suite of AI agents created by Google and several of the hyperscaler’s key enterprise technology provider partners, including Accenture, Deloitte and KPMG.

As autonomous AI tools raised security concerns and cyber leaders looked to leverage generative AI tools, Google beefed up its cloud protection portfolio through its $32 billion acquisition of Wiz last month.

“Together we can make it easier — and faster — for organizations of all types and sizes to protect themselves, end-to-end and across all major clouds,” said Sundar Pichai, CEO of Google and parent company Alphabet, during the Thursday earnings call.

“We think this will help spur more multi-cloud computing — something customers want,” Pichai added.

Cloud security is a perennial priority for CIOs, ranking just below cost controls, according to Flexera. It’s also an ongoing area of focus among providers.

Microsoft tightened internal security controls and said it had improved cloud vulnerability response protocols as part of its Secure Future Initiative earlier this month. Amazon CEO Andy Jassy highlighted AWS's attention to security last year after Microsoft suffered a series of state-linked cyber breaches.

During the Thursday earnings call, Google executives made no mention of a federal court ruling that found the company’s online advertising technology violates antitrust regulations. The company had already filed an appeal in a separate antitrust case pertaining to its online search business.

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By Nucor

As cloud computing, artificial intelligence, and data-driven applications grow more complex and widespread, the infrastructure supporting them must evolve just as rapidly. This demand has spurred a surge in data center construction. In today’s environment, choosing the right building materials is more than a design decision—it’s a strategic investment that can impact your project’s speed to market, sustainability goals, and long-term performance.

Data center structures made primarily with steel are increasingly favored due to steel’s modularity and design flexibility – making it ideal for the precise, fast-paced demands of data center development.

With regard to sustainability, electric arc furnace (EAF) technology stands out among the two steelmaking methods. Unlike the traditional blast furnace-basic oxygen furnace (BF-BOF) method—which relies more heavily on extracted raw materials and emits significantly more carbon emissions—EAF steel is produced primarily from recycled scrap, dramatically reducing emissions while supporting a circular economy.

1. Faster Construction and Stronger, More Sustainable Structures

It’s no secret that data centers are under pressure to go live quickly. Steel construction can meet that demand through speed and precision. Prefabricated steel components can be manufactured offsite and quickly assembled onsite, dramatically reducing construction timelines compared to components like concrete hardwalls. Modular design approaches, such as panelization, allow buildings to be enclosed faster and with greater consistency.

Beyond speed, steel’s high strength-to-weight ratio offers structural benefits. Its lighter weight makes it more viable in areas with seismic risks, reducing strain on foundations and increasing resistance to earthquakes. High-strength structural steel plays a key role in supporting multi-story data centers and heavy cooling systems. Over the long term, steel is also less susceptible to warping, cracking, or degrading—ensuring the integrity of the facility and uptime of the equipment it houses.

Specifying sustainable steel for your data center provides all these benefits and more with lower embodied carbon values compared to steel made via BF-BOF steelmaking methods.

2. Designed for Growth and Adaptability

Data center needs evolve quickly. New generations of servers, energy systems, and cooling equipment demand flexibility in layout and infrastructure. Steel offers this adaptability. Its precision during fabrication makes it ideal for building to tight specifications—critical in environments where every inch counts for airflow, equipment racks, and cable routing.

As technology progresses, infrastructure must scale accordingly. Steel makes future expansion easier by allowing seamless additions to existing structures. In many cases, components like cabinets and racks that reach the end of their use cycle can be replaced and recycled into new EAF steel products, supporting ongoing sustainability goals without sacrificing performance.

3. Supply Chain Strength from Domestic Sources

Construction materials don’t just shape buildings—they shape timelines and budgets. Domestic sourcing of steel can play a key role in keeping data center projects on track. Utilizing a domestic steel supply chain can yield shorter lead times, reduced transportation costs, and more flexibility when responding to changing economic or regulatory conditions.

Domestic EAF steel also comes with built-in environmental advantages. Because it’s often made closer to where it’s used and with recycled materials, its embodied carbon is significantly lower than steel imported from overseas producers, particularly if they are using the more emissions-intensive BF-BOF steelmaking process.

A Smarter Path Forward

Building the next generation of data centers requires a smarter approach to materials—one that balances performance, adaptability, and sustainability. Domestic steel produced via electric arc furnace technology checks all of those boxes. It can reduce a project’s overall carbon footprint, help accelerate delivery to end-users, and supports modularity and scalability—key factors for data infrastructure that must keep pace with constant change.

As North America’s largest producer of EAF steel, Nucor offers the breadth of products, expertise, and domestic supply chain capabilities to help data center developers meet their goals efficiently and responsibly. From structural framing to white space components, learn more about how Nucor is shaping the future of sustainable data center construction.

When China-based DeepSeek gained mainstream attention with its low-cost artificial intelligence model earlier this year, some wondered if demand for data center power had been overhyped.

DeepSeek, which develops large language models similar to OpenAI’s ChatGPT, claims that its highly efficient AI technology can effectively reduce computing costs and overall power needs, casting doubt on how much energy infrastructure data centers of the future might require.

But John Medina, senior vice president at Moody’s Ratings, thinks these advancements could fuel more growth, not less.

“What that does is it lowers the cost of computing and potentially increases the number of new companies and new applications that can be created,” said Medina. “It actually could lead to more usage than less usage.”

Mitchell Osborne, director of MEP at Adolfson & Peterson Construction, a Minneapolis-based general contractor, echoed that sentiment.

“While more efficient AI models will reduce the amount of power consumed, we are still in AI and quantum computing’s infancy,” said Osborne. “I do not foresee data centers or power infrastructure construction slowing down.”

Power construction is surging alongside data center projects as contractors rush to keep up with soaring demand, according to industry sources. Tech giants such as Amazon, Microsoft and Meta are rapidly expanding their data center footprints. Meanwhile, a joint venture among OpenAI, Softbank and Oracle will invest $100 billion in artificial intelligence infrastructure, with the potential to scale up to $500 billion, according to a White House press conference.

That shift is fueling a surge in power construction, said Ryan Wobbrock, vice president at Moody’s Ratings. He said utilities and power producers are rapidly increasing expenditures to meet the energy needs of data centers.

“We’re certainly keeping track of that, and we’re seeing the fruits of it really come through in companies’ announcements,” said Wobbrock. “Every time a company has a public statement, it seems to increase its capital budget, and a lot of that is tied to the data center growth.”

New starts and renovations

The surge in new power construction is also driving local grid work as well, said Osborne.

“I absolutely see data center and power project trends continuing,” said Osborne. “In the local market, substations are being specifically built for data centers and stability upgrades are being subsidized by these companies for existing grids.”

Older power plants, once slated for retirement, are being enhanced rather than decommissioned, said Michael Byrne, vice president at Linesight, a Dublin-based construction consultancy firm. That’s largely because new power projects still can’t keep up with the pace of data center expansion in key regions.

From 2014 to 2016, data center energy use reached about 60 terawatt-hours. By 2018, the figure jumped to about 76 terawatt-hours. In 2023, data center energy use hit 176 terawatt-hours, about 4.4% of total U.S. electricity consumption. That will jump to between 325 and 580 terawatt-hours by 2028, according to the Energy Department.

The U.S. power grid was not designed to handle this level of demand growth, said Theodore Paradise, chief policy and grid strategy officer at CTC Global, an Irvine, California-based advanced conductor manufacturer for overhead transmission powerlines.

“The transmission system is the critical enabler of all this. It is the existential piece to whether you can add additional supply,” said Paradise. “Interconnection costs [are] getting bigger. Those might have been $20 million or $40 million for substation work. Now, we’re seeing interconnection costs that can be hundreds of millions of dollars or even over a billion dollars in some cases.”

Yet, that isn’t slowing the pace of data center construction. Some developers are even proceeding without fully secured power contracts, said Byrne. Osborne said that depends on what specific phase of construction the data center or campus is in.

“If it is a single building or an expansion of an older facility, we see a gap in power availability due to permitting and general substation design,” said Osborne. “Hyperscalers and colocation campuses are usually pretty good at pre-planning during the real estate procurement phase and coordinating with local utility providers on the amount of power they need and when to start these projects.”

Tech giants, on the other hand, are putting matters in their own hands. These deep-pocketed companies are increasingly building their own power construction projects, said Medina.

“The new trend is to build a new data center, very large, and to build a power plant right next to it. Build them together,” said Medina. “The hyperscaler will pay for both. They build a gas plant, some solar and some batteries and a big data center, all together. It’s kind of like an island.”

Headwinds on power construction

Skilled labor, a persistent headwind for the construction industry, continues to be a drag on construction activity, said Osborne.

“Due to the ever-increasing amount of data center construction starts, the number of experienced teams that have completed successful projects will become competition in itself,” said Osborne. “Not only are contractors competing for work with developers and clients, but we are now competing for the people to build the number of projects being started. This creates an issue for developers and contractors alike.”

Some sustainability goals could also slow the pace of construction activity, said Byron Sarhangian, partner at Snell & Wilmer, a Phoenix-based law firm. He warned that strict environmental requirements could burden U.S. progress in AI development, especially in relation to other nations.

“When a company says it needs a gigawatt of energy and it’s got to be green, all of a sudden it’s like, ‘Listen, not sure you can get a gigawatt of energy in the first place,’” said Sarhangian. “Frankly, we’re in a race with a number of countries, including China, as it relates to quantum computing and AI. It’s almost like being in the space race and saying, ‘We’re going to go all green.’ Not the time. We need absolutely every piece of energy infrastructure that we can have.”

Looking ahead

The urgency to address these challenges has reached the federal level. The Trump administration recently issued an executive order declaring an energy emergency, aiming to fast-track new power generation and transmission construction.

“That is no small thing, that is a significant executive order,” said Paradise. “What the administration is doing in issuing that is saying, ‘What is happening now is not meeting our energy needs, this is not working.’”

Interest in nuclear energy as a potential solution is growing too, particularly among hyperscalers with aggressive goals. Microsoft, for instance, is experimenting with nuclear energy sources for data centers, but large-scale development remains years away.

“This is still some time before we see a rollout of small modular reactors on data center campuses,” said Byrne. “Nuclear energy will predominantly be used for large-scale campuses, 1 gigawatt or more. And these projects are now only beginning.”

State and federal regulators may also start weighing in on construction expansion, said Osborne.

“As power consumption increases, we may see changes in state and federal regulations to prohibit or encourage data center expansion and usage as well as AI usage,” said Osborne. “This could impact how quickly data centers and infrastructure construction can be started.”

What started as a relatively niche sector a few years ago has transformed into a powerhouse of construction activity, with no signs of a slowdown this year.

Data centers continue to drive significant growth in nonresidential construction planning, said Sarah Martin, associated director of forecasting at Dodge Construction Network. These projects contributed to a 19% increase in planning activity since December 2023, compared to just 5% growth without their inclusion, according to Dodge.

That momentum shows no signs of fading.

J.P. Morgan estimates spending on data centers could add between 10 to 20 basis points to U.S. economic growth in 2025 and 2026, according to Reuters. Big tech companies are a major reason for the surge, doubling down on data center investments in order to meet growing artificial intelligence demand.

For example, President Donald Trump recently announced Stargate, a joint venture between OpenAI, Softbank and Oracle. The JV plans to invest $100 billion in artificial intelligence infrastructure, with the potential to scale up to $500 billion by 2028. Each data center facility will span about 500,000 square feet, according to Stargate.

Here are some other major data center projects that top tech giants plan to build in 2025:

Amazon

Amazon is going big on data centers, with plans to invest $150 billion in the coming 15 years on its infrastructure to handle the expected demand for artificial intelligence and other cloud computing needs, Bloomberg reported. 

The tech giant first started opening data centers in central Ohio in 2016, and recently announced a $10 billion plan to further expand its cloud computing infrastructure in the state, per a December news release from Ohio Gov. Mike DeWine. The new investment follows a $7.8 billion plan announced in 2023, including work in New Albany, Ohio.

Those planned projects include a new $2 billion data center campus in Sunbury, Ohio. Amazon’s facility will occupy about 200 acres in an industrial park in the city, according to WBNS10. Construction of the first 450,000-square-foot building is expected to begin in January 2028 and be complete by December 2034, Data Center Dynamics reported.

Google

The Mountain View, California-based multinational corporation plans to continue its aggressive expansion into data center construction, with a number of high-profile projects slated for 2025, according to Devon Smiley, communications manager of technical infrastructure at Google.

For example, Google broke ground in July 2023 on its first data center in Arizona. The site will span 750,000 square feet, with the first phase due in July, according to Data Center Dynamics.

Plans feature a $600 million facility to support some of the firm’s signature services, such as Gmail and Google Cloud. The Mesa project will tie into the establishment of a new Phoenix cloud region, expanding Google’s digital infrastructure footprint in the area. No general contractor has been confirmed yet, said Smiley.

In the Midwest, Google broke ground in April 2024 on a $2 billion data center in Fort Wayne, Indiana. The facility will power its global AI and cloud infrastructure, according to the company. The Indiana Economic Development Corp. will give Google a 35-year data center sales tax exemption for the first $800 million invested, with options to extend up to 50 years. Atlanta-based Holder Construction is the general contractor on the project, according to local outlet 21Alive.

Meanwhile, in Nebraska, the tech giant’s newest date center project in Lincoln is under construction on roughly 580 acres, according to the Nebraska Examiner. That project complements a separate $750 million facility under construction in Omaha, according to a government release. Once complete, Google will have four data center campuses in the state, according to the company. Google did not disclose the projects’ general contractors.

Meta

Meta, the parent company of Facebook and Instagram, has big plans for data center construction. On Jan. 24, CEO Mark Zuckerburg called 2025 “a defining year for AI” in a Facebook post, and claimed the company would construct a data center large enough to “cover a significant part of Manhattan.” Zuckerburg said Meta will bring on about 1 gigawatt of computing power in 2025, and plans to invest heavily in growing the firm’s AI teams.  

That ambtious goal aligns with previously shared plans. In 2024, the firm announced new data center campuses in:

• Jeffersonville, Indiana, awarded to Turner Construction.
• Rosemont, Minnesota, awarded to Mortenson, according to Finance and Commerce.
• Montgomery, Alabama, awarded to Hensel Phelps. 
• Cheyenne Wyoming, awarded to Portland, Oregon-based Fortis Construction. 
• Aiken, South Carolina (no contractor announced). 

Each of those campuses represents an $800 million investment in the region, Meta claims.

In December, the Menlo Park, California-based tech giant announced a larger investment near Monroe, Louisiana. The custom-designed 4 million-square-foot campus will be Meta’s largest to date, the company said. When finished, the data center will represent over $10 billion in investment and the company anticipates over 5,000 construction workers will be on site at peak construction. 

The social media giant has tapped New York City-based Turner, Redwood City, California-based DPR and Minneapolis-based Mortenson to build the multibillion-dollar project. No completion date has been announced.

Microsoft

One of the largest and most recognizable tech companies in the world has been busy on the data center front. Redmond, Washington-based Microsoft has announced plans to pump more than $80 billion into cloud data centers, with half of that money going to facilities in the U.S.

“AI promises to drive innovation and boost productivity in every sector of the economy,” said Brad Smith, vice chair and president of Microsoft, in a Jan. 3 company blog post. “The United States is poised to stand at the forefront of this new technology wave, especially if it doubles down on its strengths and effectively partners internationally.”

The firm, which is also one of the largest investors in ChatGPT parent company OpenAI — with nearly $14 billion pumped into the company so far, according to CNBC — has jump-started its plans. It’s building a $3.3 billion data center on the site of the former Foxconn site in Mount Pleasant, Wisconsin, which it tapped Chicago-based Walsh Construction to lead. 

It’s also planning to invest $1 billion on three data centers in Licking County, Ohio, according to Data Center Dynamics. Burnsville, Minnesota-based Ames Construction will build one of the three data centers, a $420 million project in New Albany, the tech firm said in a construction update blog. Two other data centers worth $1 billion in West Des Moines, Iowa, and La Porte, Indiana, are also in the works.

Oracle

While Oracle CEO Larry Ellison made news with the White House announcement unveiling the Stargate initiative on Jan. 21, he had ramped up his commitment to building massive, power-hungry data centers long before that.

The co-founder and chief technology officer of Austin, Texas-based tech giant Oracle told attendees of Oracle Cloud World 2024 in September that the firm now has 160 public and private data centers, according to Data Center Frontier. 

Additionally, he told analysts the company was working on a data center requiring more than a gigawatt of electricity that would be powered by three small nuclear reactors, according to CNBC. While he didn’t reveal the exact location of the facility, he said it was in a region where permits had already been approved to build the reactors as a power source.

Those announcements followed the tech firm’s pledge from last year to spend $10 billion on data center expansion in 2025. At the time, Ellison told investors that an AI-focused data center the firm is building in Salt Lake City is so large, eight Boeing 747s would fit nose-to-tail inside it. 

“We’re bringing on enormous amounts of capacity over the next 24 months,” Ellison said.

Tariff fears are abating as the Southwest’s construction landscape heats up due to demand for data centers and chip fabs, according to Graycor Construction’s new general manager of the region.

The Oakbrook Terrace, Illinois-based firm and other contractors are racing to capture opportunities across Phoenix and beyond, even as the challenges of labor shortages and power needs loom over the sector. Amid this backdrop, Graycor Construction recently tapped Brett Helm to lead its Southwest division’s expansion into these fast-moving sectors.

Based in Phoenix, Helm brings 30 years of experience at various firms, including Redwood City, California-based DPR Construction and Falls Church, Virginia-based HITT Contracting.

Here, Helm talks with Construction Dive about market expansion, semiconductor competition and power constraints for data centers.

This interview has been edited for brevity and clarity.

CONSTRUCTION DIVE: What inspired your move to Graycor, and what are your first priorities in your new position?

BRETT HELM: A mutual subcontractor friend had mentioned to me that there could be a great opportunity here, and that he had nothing bad to say about them. So, that really perked my interest. I’m very grateful to be here and very grateful for the opportunity.

First priority is really to get in what I would call adjacent markets to the markets that Graycor is in here in the Southwest. We do have great builders, but the idea is to get a little bit more diversified in our markets. So, as one market goes down, ideally another market goes up, and we can just transfer our people from market to market. Ideally, that’s where I want to take us.

When you look at sectors like semiconductors and advanced manufacturing, how is Graycor positioning itself to stay competitive in the Southwest? Are you still seeing strong momentum in these sectors?

Yes, I’m definitely seeing strong [momentum.] We have opportunities in our pipeline right now that we’re going after. The resources that we have as an organization from the projects that we’ve completed over the years, and bringing that information to the Southwest from our other offices throughout the U.S., is how we are competitive. That is really the strength that we have.

So, when I say an adjacent market, that semiconductor and manufacturing part is really what I’m talking about, along with data centers.

What types of opportunities are you seeing in the data center space?

We have a lot of builders that can do parts of a data center, but what I’m going to do is bring in some additional resources to help us fill that market.

I’ve been in this market since the late 1990s, so a little over 25 years.

The data center market in Phoenix has just really accelerated. A lot of the colocation type markets — the quick hitters — those are a little bit easier for us to get into. And ideally, we would build that market to where we can get at the hyperscale type of clients.

With the ongoing pressures from rising costs and labor shortages, how do you see construction activity going the rest of 2025?

The tariff issue seems like it has really settled down. I know if you would have asked me this question three or four weeks ago, I probably would give you a different answer.

But right now, we’re actually getting a lot of competitive numbers from our subcontractor community. That’s a very competitive market out there right now. So, I think, construction activity is actually going to probably stay as is.

Our subcontractors are getting very good coverage on the projects that we’re going after right now. So, hopefully that continues throughout 2025.

Any other important trends in construction worth mentioning?

When we talk about data centers, our next big challenge that we’re going to have is power, getting power to these mega data centers.

You hear about these small modular reactors, SMRs. That next technology for power I think is going to be the trend that we’re going to see down the road.

I know the technology is there right now, but just getting through the permitting and all the hurdles that they have in their way to start building on these sites is difficult. Because right now, we have two great utility companies here in the Phoenix area, but there’s only so much power they can deliver. I think that’s what’s going to hold us back in this area.