AI Takeover Complete: Data Center Construction Surpasses Office Construction For The First Time
On August 19, 2025 we published what we thought was "the most insane chart", one showing that value of data center construction was about to surpass the value of office construction. We added that we would reach the intersection point within 6 months.
The most insane chart: value of data centers being built will surpass all offices in construction within 6 months pic.twitter.com/kQBGegx9Fj
— zerohedge (@zerohedge) August 19, 2025
We were right: earlier today the US published the much-delayed Construction Spending report for the month of December. It confirmed, that just as expected, the value of Data Centers constructed in the US has officially surpassed the value of Offices, a historical and very symbolic crossover which makes it clear that going forward machines, and not human workers will provide the bulk of US productivity.
And while the long-term trend here is assured - at least until there is a new luddite revolution and (soon to be unemployed) humanity revolts against its new chatbot masters, burning down every data center in sight - there may be some near-term volatility. That's because according to more real-time measures, real estate brokerage CBRE reported that construction of new data centers in the US fell for the first time since 2020 despite soaring demand for artificial intelligence computing capacity, as developers face delays in permitting, zoning and power procurement.
Capacity under construction fell to 5.99 gigawatts at the end of 2025 from 6.35 gigawatts at the end of 2024. Still, in light of the layoff tsunami, it is certain that construction of offices has slowed down even more thus keeping data centers in the pole position.
The construction delays and faster long-distance networks are driving development to move outside traditional data center sites like Northern Virginia, Gordon Dolven, CBRE’s data center research director, said in the report. The good news is that overall vacancy rate in primary markets fell to a record low 1.4% at year-end.
“Combined with growing interest in markets that offer available land and power, this is spurring investment beyond traditional hubs and reshaping the North American data center market,” Dolven said.
Meanwhile, as we warned last year, local pushback against massive AI data center projects has intensified in recent months, with the tide turning from welcoming the economic benefits of major construction projects to scrutinizing their resource-intensiveness and the associated soaring electricity prices.
Last week, Illinois Governor JB Pritzker sought to temporarily halt incentives for data centers in a bid to contain soaring power costs Bloomberg reported. An Oracle Corp. site in New Mexico that scored a package of tax incentives and support from government-backed bonds has prompted protests largely focused on its potential environmental impact. And tensions have flared in Northern Virginia, where some residents are now looking to flee what’s become one of the largest data center hubs in the world.
Still, these are just growing pains and once behind the meter power sources are mandated, and small modular reactors become an everyday phenomenon, data center construction will resume its surge. That's because AI demand is forecast to require $3 trillion in data center investment, including related power supplies, according to estimates from Morgan Stanley. New tenants absorbed a record 2.5 million gigawatts in 2025, up 38% from a year earlier, CBRE said.
Construction underway fell 29% in Northern Virginia, followed by a 15% drop in Hillsboro, Oregon, and a 14% decline in Silicon Valley, CBRE reported. Projects soared 169% in Chicago and 15% in Dallas-Fort Worth.
Atlanta had more than 2 gigawatts of projects under construction, ahead of 1.9 gigawatts in Northern Virginia, in the second half of 2025.