Driven by the relentless artificial intelligence (AI) boom, U.S. data center construction has eclipsed office building investment, with stocks like Equinix Inc. (NASDAQ:EQIX) and Digital Realty Trust Inc. (NYSE:DLR) in focus.
A Historic Real Estate Reversal
According to Augur Infinity market data highlighted by The Kobeissi Letter, data center construction spending “jumped +34%” year-over-year in March to reach a “record $50 billion” annualized rate.
This represents a massive 437% increase since the beginning of 2021, when the annualized rate stood at a mere $9 billion. Conversely, traditional commercial real estate is facing a steep decline.
Office building construction spending fell 9% year-over-year in March, down to $46 billion, officially hitting the “lowest since 2015.” This marks a historic real estate shift: data center spending now outright exceeds office building construction by $4 billion.
Office construction spending exceeded data center investments by $65 billion as recently as 2020.
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