Australia’s AI Data Centre Boom Is Outrunning Its Tradespeople

Australia and New Zealand are the most labour-constrained construction markets in the world, with every city surveyed reporting a skills shortage as AI-driven data centre projects, Brisbane’s 2032 Olympic build, health infrastructure and defence investment compete for the same specialist tradespeople. That is the central finding of Turner & Townsend’s 2026 Global Construction Market Intelligence report, published 8 July, which warns that growth in the pool of skilled labour needed to build data centres will not keep pace with demand.

The 17th annual edition of the report draws on data from 112 markets across 44 countries, and places data centres at the top of global construction demand for the first time, with industrial and logistics developments close behind. Renewables also recorded significant growth in 2026. The combination, the report argues, is splitting the global construction industry into two markets: one chasing AI and tech-led margins, the other absorbing weaker investor confidence in residential and commercial development.

A Two-Speed Construction Market Takes Shape

The Turner & Townsend report identifies data centres as the most in-demand construction sector globally, with industrial and logistics developments close behind, and renewable energy projects recording a significant 2026 rise, according to the full 2026 Global Construction Market Intelligence findings. Of the markets analysed, more than 70% report tightening or overstretched contractor capacity for data centre construction.

That is the sharp end of the two-speed market the report describes. Tech-led sectors, particularly data centres and advanced manufacturing, are accelerating rapidly on the back of sustained digital and AI demand. By contrast, more traditional sectors including residential and commercial development are experiencing slower momentum, with heightened uncertainty and structural constraints weighing on investor confidence. More than 79% of markets in hospitality, residential and commercial development reported balanced or spare contractor capacity.

Across ANZ, health is the strongest performing sector, followed by transport and data centres, with defence also performing strongly. Data centres are the top performing sector in both Sydney and Melbourne. More traditional sectors, including commercial office development and residential, continue to face weaker market conditions.

Brisbane and Perth lead the regional outlook for non-residential construction activity, with Adelaide also gaining momentum. Sydney and Melbourne benefit from strong data centre investment, while Auckland is experiencing more subdued conditions, reflecting a weaker pipeline.

MEP Trades Are the Hidden Binding Constraint

Coverage of the data centre build-out tends to focus on capital expenditure, land deals and gigawatt pipeline forecasts. The report isolates a narrower bottleneck: mechanical, electrical and plumbing trades, the specialisms that actually wire and cool a hyperscale facility. In Australia and New Zealand, 83% of markets now report MEP trade shortages. Data centres are already the most capacity-constrained sector in ANZ, with around 67% of markets reporting tightening contractor capacity. To see how those trades translate into a finished data centre build, what goes into building a hyperscale data centre walks through the assembly-line stages where MEP is now the binding constraint.

The shortage is not a regional anomaly. Turner & Townsend found that 87% of markets worldwide reported shortages in MEP trades, the skills most essential to data centre and other critical infrastructure construction.

There is a very real risk that growth in the pool of skilled labour needed to build data centres won’t keep pace with demand. AI has the potential to be a force for good in construction through significant job creation, but only if the industry invests in training, recruitment and the specialist skills needed to deliver the next generation of digital infrastructure.

Stephanie Marshall, Managing Director of Real Estate Cost Management at Turner & Townsend, made the comment alongside the report. The same dynamic sits inside the ANZ data: data centres compete for the same mechanical, electrical and plumbing trades that Brisbane’s Olympic venues and Queensland’s hospital programme rely on.

Brisbane’s Olympic Build Pushes Costs to 7.2%

Brisbane is forecast to drive construction cost inflation to 7.2% in 2026, the highest in ANZ, rising to 7.5% in 2027. Perth is forecast to reach 6.5% in 2026 before easing to 5.5% in 2027. Sydney and Adelaide are both forecast at 5.5% in 2026, with Melbourne at 5.0% and Auckland at 2.5%.

Despite the volatility created by recent geopolitical events, construction input costs have stabilised over the past year, as supply chain resilience built up since the COVID-19 pandemic has limited the impact from global volatility. Brisbane’s premium reflects the lift from 2032 Olympics preparations, alongside significant health infrastructure investment and an ongoing data centre build-out. Emmett, Project Director and Head of Construction Economics for ANZ at Turner & Townsend, said in the report: “It is no longer simply a question of relative cost, as factors such as labour availability, interest rates, supply chain capacity and digital maturity are playing an increasingly important role in successful project delivery.” Across Australia and New Zealand, the pressure on the trades pool is now the binding constraint on cost.

Every ANZ City Now Reports a Labour Shortage

Across the region, 100% of ANZ cities surveyed reported labour shortages, the most acute constraint anywhere in the world, according to the 2026 construction market conditions for Australia and New Zealand. The European Union exceeded 93%, with North America at 79%, against a global average of 71%.

• 5.4% forecast construction cost inflation across ANZ in 2026, easing to 4.9% in 2027
• 83% of ANZ markets short of mechanical, electrical and plumbing trades, against 87% globally
• ANZ average construction wage of $75.6 per hour in USD, third highest after North America at $79.5/hr and Europe
• Around 67% of ANZ markets reporting tightening data centre contractor capacity

Hourly construction wages average $75.6 per hour across ANZ in USD terms, third highest globally. Brisbane’s trades average $72.4/hr (USD), Sydney $73.4/hr and Adelaide $65.2/hr. Wage pressure is not, on its own, the problem. Demand is, and it is running ahead of the supply of skilled tradespeople willing to take the work.

AUKUS-related defence opportunities, data sovereignty investment, and the 2032 Olympic Games together with health infrastructure are all placing increasing pressure on supply chains and intensifying workforce shortages. Emmett said the region is now seeing increasing competition for skilled labour, with projects related to the Brisbane Olympics up against health projects in Queensland, as well as a data centre wave across the country as a whole, and increased investment in defence.

AI Capability Enters the Tendering Process

Turner & Townsend also tracked a parallel shift inside construction procurement. Across the markets surveyed, 66% said AI capability is now more important during tendering and client discussions than a year ago, reflecting growing demand for digital delivery methods that can lift productivity.

Volatile energy prices driven by the Middle East conflict are creating uncertainty feeding through into some material costs, although impacts are uneven across regions, and short-term logistics and supply chain stress in some locations is adding another layer for clients to manage. Clients that invest early in digital capability and AI will be better positioned to navigate the complexity, the report argues.

That investment is not a substitute for trades. Cost drivers are becoming more localised, sector-specific and structurally embedded, rather than driven by international shocks. The 2026 outlook for ANZ is one in which digital procurement helps on the margin, but the physical pool of mechanical, electrical and plumbing workers sets the ceiling on what gets built, from Brisbane outward.

Labour, Not Materials, Sets the Cost Ceiling

The 2026 forecasts now sit squarely on labour. Across ANZ, construction cost inflation is forecast to reach 5.4% in 2026 before easing to 4.9% in 2027. Materials have stabilised. The remaining escalation is in the workforce.

As Marshall put it, the report warns that continued growth in data centre demand is colliding with a workforce pool that cannot expand at the same speed. The same warning sits inside the Brisbane forecast: the city’s Olympic infrastructure is now bidding for the same MEP trades as the data centres and hospital projects that share its skyline, and without a step-change in training and recruitment, the 7.2% figure for 2026 may yet move upward.