The boom in AI has pushed data centres to the second most in-demand construction sector in the UK, new data from Turner & Townsend reveals.
Data centres are behind defence but above industrial logistics, with more traditional sectors such as commercial office development, office fit-out and residential in seventh, eighth and ninth respectively.
The Global construction market intelligence 2026 report says the growth in demand for data centres is creating a “two-speed construction market, where geopolitical tensions and economic challenges, mixed with workforce and supply chain constraints, are limiting investor confidence in traditional sectors such as residential and commercial development”.
The report also found that the gap in cost of construction between London and the regions is no longer widening, with Birmingham and Glasgow seeing significant cost increases. London is the fifth costliest place in the world to build at $6,032 per square metre. Costs are expected to increase by 3.5% in 2026 and 2027.
Global construction cost inflation is expected to rise from 4.2% in 2025 to 4.5% in 2026, before remaining broadly flat in 2027, despite the short-term impact of the conflict in the Middle East.
Labour drives up costs
The report found that labour availability is now the primary driver for cost escalation across the global construction market, and around 71% of markets report labour shortages. In the European Union, 93% of markets are experiencing labour shortages, compared to 75% in the UK and 79% in North America.
Turner & Townsend managing director for real estate cost management, Stephanie Marshall, said there was a risk that the demand for skilled labour needed to build data centres won’t keep up with demand. “In construction, AI has the potential to be a force for good in terms of job creation, but only if the right resources are put in place to support it,” she said.
