Infrastructure, data centers kept construction starts strong in May
Why this matters
The sustained momentum in construction starts driven by infrastructure and data center megaprojects signals a nuanced bifurcation in US commercial real estate capital flows. While broader CRE sectors face headwinds from tighter lending conditions and cautious investor sentiment, these large-scale projects underscore continued institutional appetite for assets tied to critical economic and technological infrastructure. The emphasis on infrastructure reflects persistent public and private sector commitments to upgrading foundational systems, which often benefit from more stable, long-term financing structures and government support. Meanwhile, data centers remain a focal point for capital seeking exposure to the digital economy’s expansion, underpinned by secular demand for cloud services and connectivity. This concentration of groundbreaking activity in capital-intensive, specialized sectors suggests a recalibration of institutional portfolios toward assets with structural growth drivers and potentially lower cyclicality. It also highlights the differentiated nature of construction risk and financing availability within CRE, where megaprojects may command more favorable lending terms despite broader credit tightening. For allocators and lenders, these trends reinforce the importance of sectoral selectivity and the growing role of infrastructure and technology-related real assets in portfolio positioning.
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Megaprojects drove sizable growth in groundbreaking activity over the month, said Sarah Martin, director of economic research at Dodge Construction Network.
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