U.S. data center construction spending could reach $360 billion to $930 billion annually by late 2027, according to new Federal Reserve projections highlighting the sector's explosive growth.
The analysis, led by senior economist Eirik Eylands Brandsaas, reflects wide-ranging scenarios for planned project announcements. The most aggressive forecast predicts investment will double current trends while the conservative estimate assumes a 75% slowdown in new construction.
A middle scenario forecasts annual data center investment climbing to about $600 billion by the third quarter of 2027, representing momentum at current planning rates. Current Fed data shows investment has accelerated sharply from roughly $100 billion annually in early 2024.
The U.S. central bank's projections underscore data centers' transformation into a dominant force in commercial real estate construction. Even the conservative scenario would represent unprecedented capital deployment in the sector, driven by artificial intelligence infrastructure demands and cloud computing expansion.
The Fed analysis simulated 1,000 investment scenarios using historical construction patterns. Data center developers have announced ambitious expansion plans as technology companies race to build computing infrastructure for AI applications.
CoStar data show 125 data centers completing construction in 2025, totaling 33.5 million square feet. That number is expected to balloon to 219 projects totaling 76.1 million square feet in 2026 and another 183 projects in 2027 totaling 73.4 million square feet.
Some of the largest data center projects are being led by major technology companies, including Meta's 2.4-million-square-foot Project Tropical in Richmond, Virginia. Meta accounts for 35 projects totaling 17.3 million square feet built this year and projected through 2027, CoStar data show.
Online retailer Amazon and its Amazon Web Services unit account for 54 properties totaling 17 million square feet, according to CoStar.
Roadblocks to growth
Data center projects are positioned to consume massive amounts of industrial land, electrical capacity and construction resources through 2027, the Fed study said. The boom has already strained electrical grid capacity in key markets and driven competition for specialized contractors and equipment.
The divergent 2027 scenarios reflect uncertainty about whether the current rate of project announcements represents sustainable long-term trends or a temporary surge that will moderate as capacity catches up with demand, according to the Fed.
"It seems plausible that the unprecedented acceleration in data center construction could be delayed by production capacity constraints," the Fed said. "While predicting when and where supply chain bottlenecks manifest is notoriously challenging, there are signs of strain across many of the inputs needed to build data centers, including land, labor, equipment, power, and capital."