Construction activity, employment booming in Texas due to data centers
Texas is experiencing a construction boom, largely driven by exponential growth in data center development, making it the second state behind Virginia in data center construction. Economists from the Federal Reserve Bank of Dallas attribute this growth to factors like cheap land, easy permitting, and relatively low electricity prices, though future price increases are projected. Specific data center projects by NTT, OpenAI, and DataBank are highlighted in Garland, Abilene, and Dallas.
Pia Orrenius, a vice president and senior economist at the Federal Reserve Bank of Dallas, presented an update on the Texas economy to the ERCOT board of directors, highlighting the state's booming construction employment, primarily fueled by the exponential growth in data center construction. By the end of 2025, Texas ranked second only to Virginia in data center construction, attracting developers with cheap land, easy permitting, and relatively low electricity prices due to ERCOT's market.
Specific examples include NTT Data's Dallas TX4 facility under construction in Garland and an OpenAI data center campus planned for eight buildings in Abilene. The article also mentions a DataBank data center in Dallas. Data center construction, alongside other non-residential and non-building activities, accounted for a significant share of total construction activity in Texas, reaching nearly 9% by the end of last year, with $11 billion in contract values.
While Orrenius noted that data center growth has so far had a modest impact on wholesale electricity prices, adding about 3% between 2021 and 2025, a larger increase of approximately 10% is projected for 2026 to 2028. Despite this, Texas's projected increases remain lower than the national average. Dallas was recently named the No. 1 primary data center market globally, with Austin-San Antonio and West Texas leading secondary and tertiary markets, solidifying Texas's role as a major AI infrastructure hub.
Orrenius emphasized the "tremendous momentum" in AI investment and data center construction, contributing to significant growth in construction employment, which she noted had not been seen at such high levels in memory.