Media Coverage
Source: Daily Journal
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Taina Rosa, Olivia Meyer
10.27.26
Data center construction spending surged 73 percent over the past year as demand for AI infrastructure drove technology companies to absorb rising development costs, while spending on other private nonresidential construction fell 5.9 percent. According to recent coverage, apartment construction is also slowing, complicating efforts to address housing shortages as high financing, land, labor and material costs—along with regulatory hurdles and litigation risks—discourage development.
Although many dispute the suggestion that the data center boom is primarily responsible for rising construction costs elsewhere, Pillsbury partner James Bobotek said it is contributing to cost pressures in certain regions.
“In major data center hubs, we’re seeing longer equipment lead times, tighter electrical labor and longer waits for power, and that can make other projects slower and more costly,” he said.
Bobotek also noted that intense competition for computing capacity is driving capital spending by hyperscalers and AI companies.
“Data centers aren’t driving the slowdown in office, retail or housing construction,” he concluded. “Interest rates, affordability and office vacancy, and post-pandemic oversupply are doing that.”