US construction spending is tilting toward data centers as office demand lags—driven by remote work and AI. The shift is reshaping real estate, jobs, and infrastructure needs.
The US is spending more on building data centers than on new office space, a sign that the economy’s center of gravity is moving toward computing and away from traditional work hubs.
Recent figures point to a crossover moment.. Data center construction spending reached $3.6 billion at the end of 2025, while office construction slipped to $3.5 billion.. For readers watching the real estate market. the message is straightforward: the structures being built right now aren’t primarily designed for desks and conference rooms—they’re built to host the servers. cooling systems. and power infrastructure that modern businesses increasingly rely on.
A key driver is the post-pandemic pullback in office demand.. After COVID-19, many companies struggled to keep office occupancy stable, leading to closures and slower construction decisions.. Remote work became a durable option for many roles, and that reduced the urgency to lease and expand office space.. AI adds another layer: as more companies automate day-to-day tasks and streamline workflows. fewer employees may be needed to be physically co-located in offices.
Empty office buildings have made this pattern visible.. Property data analyzed by CommercialCafe found that 17.6% of offices nationwide were vacant as of February. though the figure varies sharply by market.. Seattle leads with vacancy of 25%. and several other high-cost or growth-influenced cities—including Bay Area locations. as well as Austin. Detroit and San Diego—show vacancy rates above 20%.. In practical terms. higher vacancy doesn’t just change construction plans; it affects local tax bases. the vitality of commercial districts. and the willingness of landlords to invest in upgrades.
Even so. the story isn’t simply “offices are dead.” In many places. the office market is shifting rather than disappearing.. CommercialCafe reported that vacancy rates declined in 19 of 25 of the largest markets it reviewed.. The reason matters: the improvement appears tied less to employees returning to desks and more to landlords decommissioning underused office space and converting it for other purposes.. That approach can lower reported vacancy while also changing the type of real estate being produced—another signal that capital is reallocating to the next set of needs.
Why data centers are winning the construction race
Data centers are the infrastructure behind cloud services, streaming, ecommerce, cybersecurity, and increasingly AI workloads.. Unlike offices, their “demand signal” is often tied to technology growth rather than to commuting patterns.. When companies scale digital operations, they need more capacity—more computing, more storage, and reliable power.. That translates into long planning cycles and significant construction spend. because data center projects are complex undertakings involving grid connections. backup systems. and specialized cooling.
AI is also reshaping expectations for office space.. Automation can reduce certain roles and make others more remote-friendly, but it also increases the compute intensity of business.. In other words, while office space may face softer demand, the systems running across networks can become more resource-hungry.. Andy Cvengros of Jones Lang LaSalle highlighted that AI is used to automate day-to-day work and that it could directly affect how much office space people need.. The competitive shift is therefore not only about “where people work. ” but about what kind of infrastructure the economy is investing in.
Cities where the demand is already concentrated
Bloomberg’s reporting pointed to Columbus, Ohio as one example of how the data center build cycle is clustering.. After Meta broke ground on a computing hub there. major technology firms—including Amazon. Google and Microsoft—announced plans to build additional data center capacity in the area.. This kind of clustering can matter for local development: it attracts suppliers. power-related investments. and construction activity. while also potentially changing labor demand profiles toward technical and infrastructure roles.
At the same time, office construction hasn’t vanished entirely.. As of February. cities such as Boston. New York City. Dallas and Los Angeles were each building more than 2 million square feet of office space.. That suggests a transition period rather than an abrupt end.. Some new office projects may be serving specific niches—premium locations. major relocations. or companies that still need physical space for parts of their operations.. But the overall direction of spending indicates that the broadest momentum is currently favoring data centers.
The human impact: less commuting, more infrastructure
For workers, the shift can feel contradictory.. Fewer office vacancies are sometimes interpreted as a “return to normal. ” yet the underlying drivers may be reclassification and conversion rather than widespread workplace reintegration.. People who rely on office-heavy commercial corridors may notice the effect through slower foot traffic. altered leasing incentives. and changing business activity around downtown areas.
Meanwhile, data center expansion can create a different kind of opportunity.. The work is often linked to construction. electrical systems. facilities operations. and technology maintenance—jobs that may require different training and hiring pipelines than traditional office real estate jobs.. For communities. it can also raise practical questions about land use and power capacity. since data centers are power- and infrastructure-intensive by design.
What’s likely ahead is a continuation of uneven adjustment.. CommercialCafe suggested that while office vacancy declines have leveled in the past two years. a return to pre-2020 office construction patterns is unlikely.. If remote work remains common and AI keeps increasing computing demand. the US construction mix may keep drifting toward the facilities that support digital operations.
In the meantime. investors. developers. and local governments will need to plan for two parallel realities: a slower. more selective office cycle and a faster-moving data center buildout.. The winners won’t just be the companies that can build. but those that can secure reliable power. manage grid timelines. and deliver projects that meet the technical demands of a more AI-driven economy.
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