Data Center Construction Just Crossed Office Spending
Census data shows data center construction at $50B SAAR in March, +34% YoY, surpassing office ($46B, lowest since 2015). The CRE category split, in one chart.
The Data
Data center construction spending reached $50 billion SAAR in March, up 34% year-over-year, per the Census Bureau's monthly construction spending release. Office property construction came in at $46 billion — down 9% YoY and the lowest reading since 2015.
The crossing happened in January, per Wolf Richter at Wolf Street, and March widened the gap. Data center spending now runs 7.4 times its 2018 level — a +688% rise in seven years. Power plant and grid construction sat at $125 billion SAAR, up 5.5% YoY.
The flip is structural. Office has declined since 2022 as work-from-home absorption stabilized; data centers and chip plants climb on a different cycle entirely.
The Context
PitchBook estimates $3 trillion in AI-related capex through 2028 — the figure anchoring hyperscaler commentary from Microsoft, Meta, and Google in their April earnings calls.
Wolf Richter framed it as "boom at one end, bust at the other." Boom: data centers, chip plants, factories, grid. Bust: office, lodging, consumer-goods manufacturing. CRE permits fell 16% in Q1, with multifamily down 29%.
Commercial real estate as a single cap rate category increasingly fails to describe what is happening. A data center REIT and an office REIT now sit on opposite sides of a capex cycle.
Also Moving
- Pending home sales hit a 4-year high. Redfin reported sales up 7.7% YoY on a 4-week seasonally adjusted basis — the highest since September 2022 — as the Freddie Mac 30-year rate dipped to 6.23% week ending April 30 before rebounding 7bps to 6.37%.
- NAHB multifamily occupancy index dropped 13 points YoY to 69 in Q1, with mid- and high-rise occupancy off 17 points to 59 (NAHB).
- Equity-rich mortgaged-home share fell to its lowest since Q4 2021. Florida down 6.1pp YoY (49.3% → 43.2%); Arizona down 5.6pp (Q1 report).
- The Trump administration ended Biden-era FHA loss-mitigation subsidies as Q1 foreclosure filings hit 119,000, up 26% YoY — the highest in six years (BiggerPockets).
What to Watch
Three signals over the next 30 days:
- June 2 Census construction spending release for April data. Whether the gap widens or stabilizes indicates whether March was an inflection or a peak.
- Hyperscaler Q2 capex commentary. Microsoft, Meta, and Google raised AI-infrastructure guidance in April; site-selection and power-procurement detail is the next confirmation point.
- Office REIT Q1 earnings continuation. Whether mark-to-market book values catch up to the construction-spending signal.
Reporter's View
I'm watching the power-plant line more than the data center line. The grid is the binding constraint on the AI build-out — if utility-scale construction stalls, hyperscaler capex hits a wall regardless of chip supply.
Data sources: Census Bureau, FRED MORTGAGE30US, Wolf Street, NAHB, Redfin.
The National Association of Home Builders (NAHB) is the largest U.S. trade association for single-family and multifamily home builders — a 140,000-member organization that publishes the monthly Housing Market Index, Housing Starts commentary, and New Home Sales analysis.
Read definition →SAAR is the Seasonally Adjusted Annual Rate — a single month's economic activity converted to an annual equivalent by first stripping seasonal patterns, then multiplying by 12.
Read definition →BPS is the Census Bureau's monthly survey of residential building permits issued by local permit-issuing jurisdictions — the source of every county and metro permit count used in real estate supply analysis.
Read definition →CES is the BLS monthly survey of business payrolls that produces nonfarm employment counts at the national, state, and metro level — the establishment-based counterpart to LAUS unemployment data.
Read definition →Rent is the periodic payment a tenant makes to a landlord in exchange for the right to occupy a property -- the single revenue line that funds your mortgage, expenses, and profit as a rental property investor.
Read definition →A multifamily property is any residential building containing two or more separate dwelling units under one roof — from a side-by-side duplex to a 300-unit apartment complex — where each unit has its own kitchen, bathroom, and entrance, and each unit generates independent rental income.
Read definition →Sophia Warren
Residential Investment Analyst & News Editor
My realm is residential real estate investment, with a knack for spotting gems in emerging markets. I also edit the REI Prime daily news desk, where I translate federal data releases and operator signals into actionable briefs for small investors. Beyond properties, my world blooms in urban gardens and thrives in crafting stylish interiors.
More from Research
Continue exploring the Research phase of the PRIME framework.
Housing Inertia Hits 48% — Life Now Outranks Rates as Reason to Stay Put
48% of US homeowners did not consider moving in the past 12 months — up from 41% two years ago. Life circumstances now drive lock-in more than mortgage rates.
Sophia Warren · May 7, 2026
CMBS Maturity Wall: $76.6B in Hard Maturities, Office Delinquency at Record 12.34%
Trepp's Spring 2026 Quarterly Data Review pegs hard CMBS maturities at $76.6B this year — 36% with debt yield at or below 8%, and 39% concentrated in Q4.
Sophia Warren · May 7, 2026
6.45% Mortgage Rate Locks In a Fourth Failed Spring Selling Season
MBA pegged the 30-year at 6.45% for a seventh straight week. Purchase applications sit 34% below 2019. Pending sales are off 30% from March 2019. The 2026 spring is the fourth in a row to fail.
Sophia Warren · May 6, 2026