Construction’s 2026 Outlook: Data Centers Are Carrying the Sector

April 27, 2026

By: Wiss Team

Wiss Team

Construction enters the second quarter of 2026 with a split picture: a small group of contractors loaded with data center work and strong backlogs, and a much larger group watching activity across commercial, industrial, and multifamily sectors level off or pull back. The dividing line is artificial intelligence infrastructure, and according to economists surveyed by Construction Dive, that divide is only getting sharper.

Data Centers Are Doing the Heavy Lifting

Hyperscalers, the large cloud and technology companies building the backbone of AI infrastructure, spent roughly $450 billion on AI-related construction in 2025. Projections cited by Anirban Basu, chief economist at Associated Builders and Contractors, put that number as high as $700 to $725 billion in 2026.

That spending has translated directly into contractor backlogs. According to Moody’s, firms with data center work carry approximately four months more backlog than other contractors in the market right now. For those companies, that cushion matters, particularly as construction input prices jumped at a 12.6% annualized rate during the first two months of 2026, approaching levels last seen in June 2022.

“Broadly, data center development, in all of its phases, is the main driver behind any observed overall improvements in construction metrics,” said Ermengarde Jabir, director of economic research at Moody’s, in the Construction Dive report.

Outside Data Centers, the Picture Is Muted

For contractors not positioned in the data center space, 2026 is a different story. Total square footage under construction across major property types has fallen back to levels last seen in 2016, reversing a surge that ran from 2022 to 2024, according to CoStar data.

Multifamily and logistics construction have both decelerated as demand and rent gains have slowed. Office and retail remain soft, with new completions expected only in select high-growth markets. Juan Arias, national director of U.S. industrial analytics at CoStar, cited moderating developer interest across the board as a primary factor.

Trade policy adds another layer of uncertainty. Material costs are not expected to stabilize soon, with electrical components for data center builds becoming harder to source and raw material and transportation costs continuing to push construction cost inflation higher.

The Boom Won’t Last Forever, but It’s Not Over Yet

Economists are clear that the current pace of data center construction is not sustainable long-term. Jabir described the “boom period of exponential growth” as neither sustainable nor long-lived, while pointing to steady, ongoing demand for data center capacity as a floor beneath the sector.

For now, Basu’s read at ABC is that the AI buildout still has room to run. “I know a lot of you out there with data center work are concerned that this boom is going to end, and it probably will end at some point,” Basu said during a recent ABC economic webinar. “But not now.”

For the broader construction market, the near-term trajectory appears to be stabilization rather than expansion, with labor and materials costs remaining elevated and demand concentrated in a narrow segment of the industry.

What Construction Contractors Should Watch

The financial implications of this environment are real, regardless of which side of the data center divide a contractor sits on. Firms with data center backlogs face cost-escalation planning, contract-structure decisions, and project-level cash-flow management at a scale many haven’t dealt with before. Firms in slower segments face different pressure: tighter margins, more deliberate bidding, and closer attention to working capital.

Both situations call for the same thing: clear financial visibility and a team that understands how construction accounting actually works.

Wiss works with mid-market construction companies across New Jersey and New York on everything from job cost accounting and bonding support to CFO advisory and tax planning. If the current environment has made your financial picture more complicated than it was 12 months ago, our construction practice is a good place to start. Contact Chris Cowan or the Wiss construction team at wiss.com.

AI Disclosure: This article was produced with AI writing assistance and reviewed by the Wiss editorial team. Original reporting by Sebastian Obando, Construction Dive, published April 13, 2026.