Data centers now command 92% of all office-category construction dollars and a staggering 22% of total nonresidential building starts, up from under 2% in 2023, according to ConstructConnect News. The command of 92% of office-category construction dollars and 22% of total nonresidential building starts by data centers reorients capital priorities for 2026, impacting every industry segment.
Nonresidential construction starts are skyrocketing, fueled primarily by data centers and healthcare facilities. Yet, this boom masks a critical issue: labor productivity remains stubbornly below pre-pandemic levels. Labor productivity remaining stubbornly below pre-pandemic levels creates a complex outlook.
The industry must scale capacity and efficiency to meet this specialized demand. Failure risks bottlenecks and escalating costs, potentially undermining high-value projects despite the current surge.
Construction Growth Drivers: Data Centers and Healthcare Demand
- Data centers, within 'Private Offices,' saw a 380% increase in year-to-date starts through March 2026 compared to 2025, according to ConstructConnect News. The 380% increase in year-to-date starts for data centers through March 2026 compared to 2025 drives much of the nonresidential building growth.
- Hospitals also expanded significantly, with over 115% increase in year-to-date starts through March 2026. The over 115% increase in year-to-date starts for hospitals through March 2026 confirms the current construction surge concentrates in specialized, high-demand infrastructure.
This narrow focus means the current boom is not a broad market recovery. Companies in traditional nonresidential segments, excluding data centers and healthcare, likely face a silent recession. Their opportunities decline, masked by overall market growth.
Lagging Productivity: A Hidden Drag on Construction
Labor productivity in both the U.S. and Canada stands approximately 10% below 2019 levels, according to ConstructConnect News. Labor productivity in both the U.S. and Canada standing approximately 10% below 2019 levels persists despite massive capital flowing into critical infrastructure.
The industry's capacity to absorb this project influx appears strained. This points to potential bottlenecks, increased costs, and a critical failure to improve labor productivity amidst a capital-intensive boom. Unresolved issues in adopting modern techniques or addressing workforce challenges threaten profitability and delivery timelines, creating an unsustainable growth model.
Redefining 'Office' Construction and Market Impacts
The traditional 'Private Offices' category is now almost entirely defined by data center construction. The traditional 'Private Offices' category being almost entirely defined by data center construction marks a profound, permanent shift away from conventional office building, redefining 'office' construction for developers and investors. Traditional office developers must pivot strategies or face obsolescence as digital infrastructure supplants conventional workspaces. Specialized construction firms benefit from these high-value projects.
Data center developers and healthcare providers emerge as clear market winners. General contractors, however, often struggle with labor shortages and efficiency. Other nonresidential sectors may be crowded out by these high-value projects, creating uneven prosperity. By Q3 2026, traditional office developers like Tishman Speyer will face continued pressure to adapt portfolios to avoid further market contraction.
