Construction Costs Surge Amid AI-Driven Warehouse Demand

The latest data from the Bureau of Labor Statistics shows that input prices for new nonresidential construction have risen by 7.1% year-over-year (y/y) from July 2025 to July 2026, despite remaining unchanged from June.

This increase is attributed to strong global demand and tight supplies resulting from Middle East conflicts, which has driven up the price of diesel fuel by 44% y/y and liquid asphalt by 45%. Tariffs imposed a year ago have also contributed to higher prices for metals and lumber, with PPIs jumping 40% y/y for aluminum mill shapes, 22% for steel mill products, 18% for copper and brass mill shapes, and 9.9% for lumber and plywood.

Meanwhile, the demand for new warehouses is being driven by the 'race to build artificial-intelligence infrastructure,' with 15% of new leasing this year tied to data-center buildout, up sharply from a year earlier, according to Link Logistics CEO Luke Petherbridge. He noted that while some data centers are being built in rural locations, suppliers often prefer space closer to population centers for staffing purposes.