Data Center Pipeline Slows As Canceled Projects Pile Up
Despite soaring demand for artificial intelligence capacity, there are signs that the pipeline of data centers is slowing.
While the development of data centers is still at record levels and is driving overall growth in U.S. construction, the number of data center projects planned dipped in June, according to Dodge Construction Network.
Commercial project planning declined 6.9% from May to June, according to the Dodge Momentum Index, which tracks project filings. The decline was fueled by a dip in data center projects, and while institutional project planning increased by 10.9%, the index fell 1.9% overall.
“Data center activity continued to drive the Index, but its pace moderated from the extraordinary levels seen in recent months and drove the DMI to pull back over the month,” Dodge Director of Economic Research Sarah Martin said in a statement. “Otherwise, planning activity accelerated across nearly every other sector.”
Data center development started the year on an upward trajectory. Construction in the sector for the top four U.S. markets shot up 33% in the first three months of 2026, according to CBRE. Construction spending on data centers eclipsed $50B for this first time in April, according to the U.S. Census Bureau.
Contractors with data center capabilities had a 12-month backlog of projects in April, compared to a backlog of eight months for those without digital infrastructure contracts, according to Associated Builders and Contractors.
But headwinds have started to have an impact. Following local opposition, Compass Datacenters and Blackstone's QTS each pulled out of multibillion-dollar projects in Prince William County, Virginia, while the county this week rejected a third project that would have allowed for 42M SF of new data centers. In North Carolina this week, Energy Storage Solutions withdrew plans for a nearly $20B project in Edgecombe County.
The number of places where developers are allowed to build data centers is poised to shrink. At least 14 states and dozens of towns, cities and counties are considering bans on digital infrastructure projects, Bisnow reported in June.
