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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.<\/p>\n
Tom Fox\/Staff Photographer<\/p>\n
Construction employment is booming in Texas, something economists say is a\u00a0symptom of the exponential growth in data center construction<\/a> in the state.\u00a0<\/p>\n Pia Orrenius, a vice president and senior economist at the Federal Reserve Bank of Dallas, presented an update on Texas\u2019 economy Tuesday during ERCOT\u2019s board of directors meeting.<\/p>\n Dallas TX1 data center electrical room is pictured at the NTT Data center campus in Garland.<\/p>\n Tom Fox\/Staff Photographer<\/p>\n The presentation was wide-ranging and titled \u201cRegional Economy Twists and Turns: What\u2019s Ahead?\u201d with a photo of a roller coaster, a theme Orrenius said reflected the \u201cinteresting times\u201d for agencies including ERCOT and Dallas Fed.<\/p>\n Article continues below this ad<\/p>\n Related: North Texas is divided over data centers. Local officials’ votes highlight the tension<\/a><\/p>\n \u201cSometimes it can be hard to see when you\u2019re heading when you\u2019re upside down on the roller coaster,\u201d she said.<\/p>\n A highlight of the conversation was growth in data\u00a0center construction, which has far outpaced overall construction activity since 2022.<\/p>\n \u201cThe data center construction and, really, what we\u2019re seeing more broadly, is kind of a manufacturing boom in the state and broadly in the nation as well,\u201d Orrenius said. \u201cIt\u2019s helping offset what we\u2019re seeing also in residential construction, which is a downturn.\u201d<\/p>\n Article continues below this ad<\/p>\n 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 \u201cData Center Alley.\u201d\u00a0<\/p>\n \u201cYou 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\u00a0ERCOT,\u201d \u00a0Orrenius said. \u201cFrankly, I look at this data, and I think it could even catapult us into the top state for data center construction, and I don\u2019t know if y\u2019all think that\u2019s good news or bad news. Certainly more challenges for ERCOT.\u201d<\/p>\n Steel frames are assembled at the OpenAI data center in Abilene. Eight data center buildings are planned for the campus.<\/p>\n Shelby Tauber\/REUTERS<\/p>\n Orrenius discussed the \u201ctremendous momentum\u201d in AI investment and data center construction, noting that construction employment growth was up last year with an \u201ceven bigger boost\u201d this year.<\/p>\n \u201cI can\u2019t remember a time when we\u2019ve seen such high growth in construction employment,\u201d she said.<\/p>\n Article continues below this ad<\/p>\n Related: Dallas ranks No. 1 primary data center market globally, surpassing Atlanta, Virginia<\/a><\/p>\n Construction contract values have risen, largely driven by \u201csoaring\u201d to two types of activity: nonbuilding, like power plants, water infrastructure, roads and more, and nonresidential, including data centers.<\/p>\n The latter has been trending up since 2021 or 2022, \u00a0Orrenius said.<\/p>\n \u201cIt\u2019s been exponential growth in the construction activity around data centers,\u201d she said. \u201cReally, 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\u2019s a tremendous share of construction activity growth that\u2019s just data centers.\u201d<\/p>\n Orrenius acknowledged electricity prices can be a concern when it comes to data centers but said Texas hasn\u2019t felt the weight of that the same way other states have.\u00a0<\/p>\n Article continues below this ad<\/p>\n \u201cIf you adjust for inflation, you can see electricity retail prices are actually down from 2015 so we\u2019re really not seeing the data center construction, which has been massive play out in electricity prices here yet,\u201d she said.<\/p>\n Comparatively, Virginia\u2019s electricity prices have begun edging up, which could be a sign of the state\u2019s data center construction spilling over into power costs there.<\/p>\n Dallas Fed researchers are studying how data center construction and openings impact wholesale electricity prices.<\/p>\n<\/p>\n
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