US general office construction is on pace to be overtaken by new data centers in coming months

The U.S. commercial real estate market is undergoing a major shift as demand moves away from traditional office buildings and toward data centers, fueled by the rapid expansion of AI and the massive computing power it requires.

By June, Census Bureau data showed spending on data centers had topped $40 billion, nearly matching the $44.17 billion spent on office space. For the first time, data center investment is set to surpass office construction in the months ahead.

The reversal is striking. In 2021, office projects totaled more than $65 billion, while data centers accounted for less than $10 billion. Since then, office spending has steadily fallen while data center construction has surged more than fourfold.

“This is the two biggest real estate trends in one graph,” said Peter Mallouk, CEO of Creative Planning.

The boom comes alongside soaring energy demand. Data centers now consume about 5% of U.S. electricity, a share projected to exceed 10% by 2030, according to McKinsey and Apollo data cited by The Kobeissi Letter.

“This surge is being driven by rapid digitalization and the rise of AI,” The Kobeissi Letter noted. “Energy will soon be the AI bottleneck.”