Data Centers Are Eating Construction Pipelines

• Data over people: A surge in data center development is pulling capital and builders away from traditional commercial property types.

• Chinese home trap: China’s home prices extended their decline in December 2025 despite government support efforts.

• All together now: Traditional corner offices are giving way to more flexible layouts as reinforcing hierarchy falls out of favor with office designers.

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Data Centers Are Eating Construction Pipelines

Commercial builders want to build data centers and little else. According to some recent data, the appetite for traditional office, multifamily, retail, and even warehouse projects is drying up in boardrooms and bid rooms across the country, while data center projects are capturing the majority of new development pipelines. Data center development spending in the United States topped $43.8 billion through October 2025, more than double the previous year, and roughly eight times what it was in 2023, a clear sign of where capital and labor are heading.

The drivers are structural. Data center development, particularly for large artificial intelligence workloads, has become one of the few parts of the real estate economy with clear demand growth. Developers and contractors repeatedly report that data center work outpaces all other sectors by a wide margin, with a net positive outlook in construction activity several times stronger than for traditional commercial types. In contrast, office construction remains near historical lows and multifamily starts are still down sharply from their peak. While most property types are seeing new supply shrink because of high costs and macro uncertainty, data center capacity is expected to expand by double digits through 2026, driven AI infrastructure commitments.

That imbalance shows up in how developers are spending their time and capital. Data centers often require bespoke design, massive electrical infrastructure, and specialized subcontractors. Many general contractors now say they prefer that work because it offers revenue certainty and long construction schedules. Builders will bid aggressively for data center campuses that can eclipse $1 billion in total construction value and thousands of worker-hours over multiple years. Meanwhile, offices sit half-empty, multifamily starts are throttled by financing costs, and warehouse developers are waxing and waning with e-commerce demand. In some regions, land that would have once been earmarked for spec industrial is now being annexed into power zones or utility corridors for future data campus development.

The real estate value chain itself is adjusting. Land prices in places with cheap access to power is increasing. In contrast, land for speculative office or retail construction is being marked down or repurposed. That feeds back into valuations, financing, and lender willingness to underwrite non-data projects at scale.

This does not mean other property types have no future, but it does suggest that the industry’s resource allocation is tilting sharply. Office and retail may find new life through adaptive reuse—precisely because ground-up development is scarce. Multifamily will compete for capital with these digital infrastructure titans until macro costs ease. The data center boom is real and operating on a scale few other commercial sectors can match, and its outsized pull on builders and developers is forcing the rest of the real estate world to change its thinking about where to allocate its dollars.

Overheard

China’s Home Prices Slide Continues as Policy Support Struggles to Lift Demand

New data from China’s National Bureau of Statistics shows new home prices extended their decline in December, slipping 0.4 percent from the prior month and falling 2.7 percent year-over-year—the fastest annual drop in several months. Of 70 surveyed cities, only a handful posted gains, while the vast majority recorded declines, underscoring broad weakness across tiers and cities. Investment in property and sales volumes also remain depressed, reflecting a market that has yet to regain traction despite repeated policy efforts.

What makes this downturn distinct from previous cyclical dips is its persistence and depth. Prices have now fallen for multiple years, with forecasts pointing to continued pressure well into 2026 as structural forces like overbuilt inventory, weak household confidence, population shifts, and tight financing weigh on demand. Even where policy has eased purchase restrictions and lowered mortgage costs, housing has remained a drag on domestic consumption and local revenue streams.

For real estate stakeholders who view China as a bellwether or a major market in its own right, this slide highlights how a prolonged reset can reshape investment calculus. The sector’s retrenchment is diminishing the wealth effect that once drove consumer spending and tightens the feedback loop between property and broader economic activity. With domestic demand still soft and policymakers signaling only incremental support, the market’s bottom remains indistinct, suggesting slow adjustment rather than sharp rebound.

The Workplace Is No Longer Built Around the Corner Office

The notion of the corner office as a corporate crown jewel no longer resonates the way it once did, and that reflects how leadership and team work have evolved in the hybrid era. Top executives are increasingly questioning the value of traditional private offices as symbols of status, a shift tied to flatter management styles and more distributed work patterns. What was once an obvious architectural cue about hierarchy is being rethought in favor of spaces that reflect collaboration and flexibility.

This shift comes as companies continue to recalibrate their expectations for in-office time and workplace experience. Hybrid models are now the norm in many sectors, with workers splitting time between home and office, attendance itself becoming a performance metric in some firms and shaping how space is used. While some organizations pursue rigid return-to-office mandates, others like Citi are embracing hybrid policies as a competitive edge in talent strategies. The result is that workplaces are less about clocked presence and more about purposeful presence — spaces designed for moments of high-value interaction rather than individual isolation.

This evolution challenges decades of office conventions. As companies seek environments that justify the commute and support culture, design will increasingly orient around zones for collaboration, learning, and concentrated work instead of fixed desks and executive enclaves. The office is being reinterpreted as a tool to amplify meaningful interactions rather than reinforce pecking orders.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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