By TIFFANIE REYNOLDS

If you attended the AGC’s 2026 Annual Convention in Orlando March 24-26, you left with little doubt about where one of the construction industry’s most powerful markets is heading.

The session “Mission Critical: Why Data Centers Are Dominating Construction” delivered exactly what its title promised: a frank, data-backed discussion about a sector that has fundamentally reordered the commercial construction landscape in many ways.

Moderated by Bryan Kelley, SVP legal at Balfour Beatty Construction, the panel drew on the expertise of three heavyweights in the industry: Ken Simonson, chief economist at AGC of America; Alex Vess, project management director at Turner & Townsend; and Matt Raponi, senior manager of data center sourcing & procurement at Amazon Web Services (AWS). Together, they painted a vivid picture of a market that requires a change in how we address workforce, onsite wellness and health and community engagement.

The Numbers Don’t Lie

Simonson opened the conversation with data that reframes many assumptions about the market. For years, data centers were lumped under the “office construction” category in the Census Bureau’s construction spending reporting, obscuring their true scale. When the numbers are separated out, the growth story becomes jaw-dropping.

Data center construction has grown 397 percent since January 2020, currently running at a seasonally adjusted annual rate of nearly $47 billion, now surpassing traditional private office construction, which has cratered 38 percent over the same period. The year-over-year growth rate as of January 2026 remains at 31 percent, even as broader private nonresidential construction has dipped 5 percent.

“I’m confident the construction boom is going to continue,” Simonson told the audience. “Our curve started turning back up again through 2026 and 2027.” The AGC survey backs him up: data centers earned the highest optimism score of any of the 17 market types surveyed with 65 percent of respondents expect the sector to grow in 2026 versus 2025, the highest reading in 15 years of tracking.

Scale That Staggers the Imagination

Five years ago, a large data center project used 24 to 48 megawatts (MW), a significant amount of electrical power designed to support a high-density computing facility. To put it in perspective, a 48-MW facility is equivalent to the power consumption of roughly 15,000 to 50,000 homes. In 2026, that benchmark has been surpassed. Vess, who manages more than 800 MWs across campus projects spanning 20 to 650 acres, details the scale. “The shift toward AI demand for hyperscalers has driven growth. Although 48 to 72 MWs was standard five years ago, now it is the floor, driven by the processing power of the chips and an insatiable demand for hyperscale.”

Raponi, who manages construction procurement for AWS, said, “AWS has added three gigawatts of capacity in the past 12 months alone, doubling its pace since 2022 and expecting to outpace that in 2027.” Campus sizes are expanding, he noted, because of how the work being performed inside them has changed. “Latency is important. These facilities should be located near where the customer is. But now, the workload requires computer chips to be located next to each other, so we’re building larger campuses and co-locating the chips in the same place.”

Not a Bubble, But a Slow in Growth

The panel addressed the data center “bubble” debate head-on. The consensus: this is not 2001’s dot-com implosion. “There will be some groups that struggle to make it past four or five years out,” Vess acknowledged, “but Stargate (a massive, multi-billion dollar AI data center project initiated by OpenAI and Oracle in Abilene, Texas) and gigawatt-plus campuses are there for machine learning. Very dense compute power, training models, etc. can be done remotely and outside of metro markets.” He added that a second wave of inference-based data centers, located closer to metro areas, is coming to support broader AI adoption.

Raponi framed it with a sweeping perspective: “AI and machine learning will be the internet of this generation and a real game changer in how work gets done.”

Simonson countered with the real constraints on data center growth, like local opposition to siting, power limitations, water availability and above all, workforce (especially electricians). “These are factors that are slowing down growth, but not decreasing it,” he emphasized.

The Modular Revolution and Workforce Imperative

Workforce constraints are reshaping how data centers are built. With campuses now fielding 10,000 or more workers during peak construction, owners and contractors alike are turning to modular construction as one strategic lever.

“Modular construction allows better use of resources from the electrician side,” Raponi explained. Moving data center electrical construction offsite into a factory environment allows for the better use of electrician resources by creating a controlled, assembly-line process that maximizes productivity, safety and precision. Electrical work, which makes up 45 percent to 70 percent of data center projects, becomes more efficient because it solves labor shortages by limiting onsite congestion and uses specialized, repetitive labor.  He noted that consolidating testing in a controlled environment further improves outcomes and reduces onsite congestion, especially when multiple data center buildings are under construction simultaneously on a single campus.

Breaking Into the Sector

For contractors hoping to break into the sector, the panelists offered clear guidance: Mission-critical work requires deep M/E/P expertise, sophisticated cost and schedule management and the ability to keep skilled crews intact through the duration of a long-running campus build. “Appreciation events, food catered in, onsite parking, onsite paramedics, these things are all important. Tradespeople talk to each other about treatment and comfort,” Raponi said. He suggests contractors take notes from the oil industry and look to take care of the workforce and offer competitive salaries and benefits.

For smaller contractors not yet ready for the main arena, colocation projects, tenant improvement work with heavy M/E/P and support facilities like cafeterias and warehouses within the campus line represent meaningful entry points.

The message from the panel was clear and optimistic: data centers are not a trend, we haven’t reached the bubble and the industry will continue with steady growth. They are the defining construction story of this decade and the firms that respect their demands and build the right relationships will be well positioned to support, or lead, in years to come.