Data Centers Lead the Way

By Kevin Coleman, Market Researcher, Channel Marketing Group
October 2025

Data centers, the critical infrastructure that supports the digital economy housing the servers and systems that power everything from social media to streaming platforms to enterprise software to artificial intelligence computations, have led construction growth in the U.S. for nearly two years and have been one of the few bright spots in the broader nonresidential construction segment.  

According to ConstructConnect, from Q1 2024 to Q3 2025, data center investments accounted for over 70% of the increase in private nonresidential construction spending, completely dominating the market.  And they are accelerating. During July, ConstructConnect tracked the largest data center construction surge on record with $14 billion in data center construction starts. This amount doubled the previous monthly high of $7.4 billion set in August 2024 and was so significant that the single month of July 2025 exceeded the entire first half of 2025’s total spending of $12.8 billion. August again marked one of the most active months in 2025 for U.S. data center momentum, with nearly 10.5 GW and over $100 billion in new project announcements, several billion-dollar filings across Texas, Kansas, and New Mexico.  

In fact, we are nearing the inflection point where data center spending will surpass office spending.  Since the downturn in 2019, office construction has declined 19%, whereas data center construction has accelerated over 200%.  Whether this reflects where value is created is a topic for another debate, the data is unmistakable in terms of growth, innovation and sustainability.

According to Harvard economist Jason Furman, U.S. GDP growth in the first half of 2025 was almost entirely driven by investment in data centers and related AI technologies. Excluding these technology-related categories, GDP growth would have been just 0.1% on an annualized basis. This clearly illustrates the growing impact of data centers and AI development on the economy.  

McKinsey estimated that by 2030, data centers will require $6.7 trillion of investment worldwide to keep pace with the demand for computer power. Data centers equipped to handle AI processing loads are projected to require $5.2 trillion in capital expenditures, while those powering traditional IT applications are projected to require $1.5 trillion in capital expenditures 

While U.S. data centers have traditionally been concentrated in Northern Virginia and Silicon Valley, with significant presence in Texas and around Chicago, the economics and—more importantly—zoning and access to power are pushing out data center development to areas of the country where regulations, power and scalability align. This opens opportunities for distributors in areas of the country where data centers previously were not present.  

Data center infrastructure, relatively unchanged for nearly 20 years, is rapidly developing with artificial intelligence driving increasing watts per chip and AI’s parallel processing, which requires more interconnections between chips. Next-generation chips are driving further changes, particularly in power distribution. This is making power and thermal engineering more important to data centers continued operations.  

Recent accounts or reports from electrical distributors including Wesco, Sonepar, Graybar, CED, Rexel, Border States and City Electric, and leading product manufacturers, such as Schneider, nVent, ABB, Eaton, Delta Electronics, Trane, Johnson Controls, Vertiv and others, cite high growth from data center investments as drivers of strong, and in some cases, record results.

The data center value chain is complex with multiple layers, starting with the real estate developers who build data centers to the utilities that power them, to the semiconductor firms that produce chips to the cloud service providers or “hyperscalers” that host data to suppliers of adjacent products that are vital to the seamless operation of data centers. Understanding each step of the value chain and the construction process can help identify when and where opportunities for manufacturers and distributors can become involved.

Given the scale of investment in both electrical and HVAC infrastructure and IT products, there is a large and growing opportunity for distributors to participate in the market. 

Data centers are complex economic ecosystems with a concentration of interconnected businesses, services, and infrastructure that emerge within close proximity. These clusters can significantly influence regional development, innovation, and economic diversification. The infrastructure required by data centers weaves through the robust ecosystem of service providers and related businesses. High-speed internet, fiber-optic networks, and robust power grids are built or enhanced to attract tech companies, cloud service providers, and AI startups. Data centers require massive energy inputs, often leading to investments in renewable energy and energy-efficient technologies.

The first way distributors participate is the traditional manner of supplying the broad range of critical electrical power distribution and HVAC products such as cable and wiring, transformers and switchgear, UPS systems, power distribution units (PDUs), computer room air conditioners (CRACs), chillers (air- and water-cooled), cooling towers, compressors, among others. In addition, the opportunities are not just in the initial construction and outfitting of data centers, but in MRO continuing support, including replacement, repair and upgrades.

A key value-add for distributors is their ability to leverage manufacturer relationships. Given their access to leading manufacturers allows distributors to secure better terms, address supply chain risks, and provide the latest technology and high-quality products required for mission-critical data center operations.

Beyond the traditional role of supplier, there are critical value-added services that localized distributors are uniquely positioned to provide. Since data centers are large, complex projects requiring large power capacity, 24/7 operation, reliability and scalability for future expansion, distributors who can contribute solutions to these complexities provide demonstrable value to developers, contractors and ultimately, end-users.

Distributors that offer project management support can provide invaluable assistance to streamline data center builds by ensuring just-in-time delivery of materials aligned with strict timelines, warehousing, kitting, and advanced shipping notifications. On-site material handling services can improve labor efficiency at the installation site and reduce time spent transporting materials by providing vendor-managed inventory services like material cages, trailers, and laydown yards.

Distributors can become critical partners in data center construction and operation, driving efficiency, reliability, and timely delivery. Identifying potential projects, especially as data center development increasingly migrates from traditional sites to those that balance the competing priorities of zoning, power generation and scalability, is a critical strategic planning activity for distributors. Identifying the stages in the sales process where distributors can become involved is also critical. Take some time to identify distributors with the above-mentioned value-added expertise who can become involved early in the project lifecycle and become trusted partners.

Electrical market growth is closely tied to the electrical capacity of data centers, regardless of square footage or server costs. There are substantial opportunities.

The thermal market will likely grow faster due to the additional requirements of higher rack densities. And liquid-cooling solutions will be additive to existing air-cooling solutions. This is an exciting growth opportunity.

Construction and installation spending is tied both to the square footage of data centers and the amount of infrastructure equipment. Rising rack density puts downward pressure on the “white space” square footage for IT equipment but increases the square footage of related “gray space” for infrastructure. 

With time to energize a data centers increasingly the primary constraint and site selection factor, helping data center developers ensure self-generation offers opportunities to engage and grow business with the addition of gas turbine or small modular nuclear reactors lessening reliance on the grid.

The outlook for electrical and thermal solutions is healthy, and distributors have a key role to play in the growing data center market.