JLL Sees U.S. Construction Costs Rising 5% Through H2 2026 as Data Centers Strain Capacity
Updated
Updated · For Construction Pros · Jul 27
JLL Sees U.S. Construction Costs Rising 5% Through H2 2026 as Data Centers Strain Capacity
3 articles · Updated · For Construction Pros · Jul 27
Summary
U.S. construction costs are already rising about 5% year over year, and JLL expects that pace to continue through the second half of 2026 with further acceleration later this year.
Trade-policy shifts, labor shortages and heavy data-center demand are driving the increase, with Section 232 tariffs on steel, aluminum and copper and higher energy prices lifting material costs.
12.2 months of backlog for data-center contractors versus 8.3 months for other commercial builders shows where capacity is tightest and where cost pressure is strongest.
0.6% projected construction employment growth in 2026 trails historical norms, while 61% of U.S. metro areas face labor constraints, a share JLL expects to reach 72% by 2027.
Higher labor and material costs are increasingly being built into bids, pushing owners to lock in procurement and planning earlier for projects over the next several years.
As data centers monopolize contractors in 2026, will other commercial sectors face a complete building freeze due to skyrocketing labor costs?
If AI infrastructure demand suddenly cools, could the industry's massive backlog collapse into an unprecedented overcapacity crisis?
With grid bottlenecks driving up expenses, can technological innovations like modular construction bypass the current material and labor crisis entirely?