Construction workers build out the rooftop chillers and the water lines that will feed them atop Dallas TX4, which is under construction at the NTT Data center campus in Garland. It will take 40 water-filled chillers to cool the fourth data center built on the property.
Tom Fox/Staff Photographer
Construction employment is booming in Texas, something economists say is a symptom of the exponential growth in data center construction in the state.
Pia Orrenius, a vice president and senior economist at the Federal Reserve Bank of Dallas, presented an update on Texas’ economy Tuesday during ERCOT’s board of directors meeting.
Dallas TX1 data center electrical room is pictured at the NTT Data center campus in Garland.
Tom Fox/Staff Photographer
The presentation was wide-ranging and titled “Regional Economy Twists and Turns: What’s Ahead?” with a photo of a roller coaster, a theme Orrenius said reflected the “interesting times” for agencies including ERCOT and Dallas Fed.
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“Sometimes it can be hard to see when you’re heading when you’re upside down on the roller coaster,” she said.
A highlight of the conversation was growth in data center construction, which has far outpaced overall construction activity since 2022.
“The data center construction and, really, what we’re seeing more broadly, is kind of a manufacturing boom in the state and broadly in the nation as well,” Orrenius said. “It’s helping offset what we’re seeing also in residential construction, which is a downturn.”
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By the end of 2025, Texas had the second-most data center construction of any state as it continued to trail Virginia, known for its “Data Center Alley.”
“You can understand why, if you want to build a data center and you have your pick of any state in the country, that it makes a lot of sense to come to Texas: cheap land prices, relatively easy permitting and relatively low electricity prices thanks to ERCOT,” Orrenius said. “Frankly, I look at this data, and I think it could even catapult us into the top state for data center construction, and I don’t know if y’all think that’s good news or bad news. Certainly more challenges for ERCOT.”
Steel frames are assembled at the OpenAI data center in Abilene. Eight data center buildings are planned for the campus.
Shelby Tauber/REUTERS
Orrenius discussed the “tremendous momentum” in AI investment and data center construction, noting that construction employment growth was up last year with an “even bigger boost” this year.
“I can’t remember a time when we’ve seen such high growth in construction employment,” she said.
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Construction contract values have risen, largely driven by “soaring” to two types of activity: nonbuilding, like power plants, water infrastructure, roads and more, and nonresidential, including data centers.
The latter has been trending up since 2021 or 2022, Orrenius said.
“It’s been exponential growth in the construction activity around data centers,” she said. “Really, overall last year it was about $11 billion or about 5.7% was just data centers, but by the end of the year, given it was rising all last year, it was closer to 9% of total construction activity. That’s a tremendous share of construction activity growth that’s just data centers.”
Orrenius acknowledged electricity prices can be a concern when it comes to data centers but said Texas hasn’t felt the weight of that the same way other states have.
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“If you adjust for inflation, you can see electricity retail prices are actually down from 2015 so we’re really not seeing the data center construction, which has been massive play out in electricity prices here yet,” she said.
Comparatively, Virginia’s electricity prices have begun edging up, which could be a sign of the state’s data center construction spilling over into power costs there.
Dallas Fed researchers are studying how data center construction and openings impact wholesale electricity prices.
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Various fiber optic cables run through the DataBank data center in Dallas.
Elías Valverde II/Staff Photographer
So far, they concluded new data centers added about 3% to wholesale electricity prices in the ERCOT region between 2021 to 2025.
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“So, 3% is not much and that’s significantly less than the national average, so … it doesn’t seem like we’re seeing a lot of pressure on prices here yet,” Orrenius said. “Forward-looking, however, continued data center construction and openings are expected to add about 10% to wholesale electricity prices in the ERCOT region in 2026 to 2028.”
Orrenius said that increase is still lower than the national average.
A recent report from a real estate firm named Dallas the No. 1 primary data center market in the world with Austin-San Antonio and West Texas led the secondary and tertiary market rankings, underscoring Texas’ growing importance as a large-scale AI infrastructure hub.
This reporting is part of the Future of North Texas, a community-funded journalism initiative supported by the Commit Partnership, Communities Foundation of Texas, The Dallas Foundation, the Dallas Mavericks, the Dallas Regional Chamber, Deedie Rose, Lisa and Charles Siegel, the McCune-Losinger Family Fund, The Meadows Foundation, the Perot Foundation, the United Way of Metropolitan Dallas and the University of Texas at Dallas. The News retains full editorial control of this coverage.