Caution Urged as Data Centre Construction Grows: Industry Experts Weigh In

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Industry leaders are expressing caution regarding the rapid expansion of data centres, emphasizing the need for adaptation in construction methods and potential regulatory challenges.

The construction industry is anticipating a significant increase in data centre development as a driving force for growth projections extending into 2026 and beyond. However, experts warn that the rise of hyper-scale data centres could present challenges that necessitate a reevaluation of expectations. Bob Pragada, the CEO of Jacobs, an engineering and construction solutions provider, recently stated during an earnings call that the company expects a robust opportunity to capitalize on this trend in the latter half of the year, noting that the investment cycle is still emerging.
Despite this optimistic outlook, not all players in the construction sector are poised to benefit from the current surge in data centre projects. Aarni Heiskanen, a representative from Finnish firm AE Partners, referenced comments made by Ciarán Forde, a senior vice-president at CTS Nordics, during the Datacenter Forum 2026 in Helsinki. Forde emphasized that the construction of data centres has evolved beyond traditional projects with strict timelines; they now resemble technology production systems that incorporate construction elements. Heiskanen elaborated that the design of a data centre is dictated by its IT load, which in turn influences power distribution, cooling systems, and redundancy strategies, with mechanical, electrical, and plumbing (MEP) systems potentially comprising over 70% of the overall construction costs in complex facilities.
To remain competitive in this rapidly changing landscape, construction firms must adapt their approaches and delivery models. Heiskanen cautioned that if builders continue treating data centres merely as atypical construction projects, they risk being relegated to the role of execution vendors, focused solely on concrete and steel, while the essential integration tasks are handled elsewhere. The contractors who will thrive in the data centre sector are those willing to transition from traditional site execution roles to that of system integrators.
Speed is becoming a critical factor in the completion of data centres. Consequently, prefabrication is reshaping the construction process through standardized systems, integrated supply chains, and digital workflows that can be replicated across various projects. Paola Manteca, the general manager for modular data centres at Schneider Electric in Europe, described the new generation of data centres as comprising factory-preassembled pods and skids. These integrated systems for power, cooling, cabling, and containment are designed to minimize onsite work and reduce the likelihood of errors, further compressing construction timelines.
However, the sheer scale of the latest data centres is raising concerns at levels beyond local governance. Notably, a newly approved data centre campus in Utah, named Stratos and backed by entrepreneur Kevin O’Leary, is projected to consume more than double the average electricity usage of the entire state, raising alarms about its environmental impact. This trend is prompting many municipalities and even entire states in the U.S. to impose temporary bans on new developments as they grapple with the implications of such massive facilities.
The demand for land is also becoming a pressing issue for developers. According to Cushman & Wakefield, the average data centre footprint was approximately 224 acres in 2024, marking a 144% increase since 2022. Some studies indicate that future hyper-scale facilities may require up to 1,000 acres. O’Leary's Stratos facility has received approval to occupy 40,000 acres of private land, alongside 1,200 acres of military and state-owned property. This escalating need for land is pushing new data centres into rural regions, often at the expense of valuable agricultural land, which has sparked tensions in local communities.
Local governments are beginning to explore policies that would classify data centres as a unique land use, aiming to divert development from prime farmland and implement stricter reviews for large-scale projects. These policies may include enhanced agricultural zoning and performance standards to mitigate issues related to buffering, traffic, noise, and long-term site management.
The rapid advancements in artificial intelligence (AI) and its accompanying demand for computational power raise questions about the sustainability of hyper-scale data centre development. While some believe that the growth of such facilities is inevitable, there are also voices cautioning that the trend may be too ambitious. Looking ahead, there is speculation that smaller facilities may become more favorable. Pete Sacco, founder and CEO of PTS Data Center Solutions, introduced his new company, Gray Wolf, which aims to establish smaller data centres in closer proximity to users, operating on a franchise model. Sacco highlighted that clusters of small data centres, each requiring only 5 to 20 megawatts of power, represent the future of data centre development.
Sacco pointed out that many large-scale projects are facing cancellations due to interconnection delays and local opposition. He noted that the demand for inference work, which entails responding to prompts rather than training, is expected to surge, potentially accounting for 55% of AI computing needs by 2027. This shift necessitates that new facilities be situated nearer to users rather than in remote rural areas.
"Instead of constructing a 1,200-megawatt data centre—of which there are no longer suitable locations—I could establish 120 smaller 10-megawatt data centres within a region and connect them," Sacco explained. "The vision is to emulate the Starbucks model within the data centre sector. Some locations will be company-owned, while the majority will operate under franchising agreements, but all will function as a distributed autonomous organization following a cohesive cloud-based strategy."
Should Sacco's vision materialize, the implications for the construction industry could be profound. The establishment of smaller, standardized facilities across a greater number of sites reinforces the need for construction firms to adapt their delivery platforms, as emphasized by industry leaders Forde, Heiskanen, and Manteca. Whichever direction data centre development ultimately takes—whether towards expansive singular facilities or networks of smaller interconnected units—the construction industry must brace itself for unprecedented changes.

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