The 55-week steel queue is repricing the data center shell

Steel prices have climbed 25% over the past year, the wait for fabricated steel has more than doubled to 55 weeks, and Tom Park, Skanska's vice president of strategic supply chain, put the cause on the buildout itself during a Sept. 10 webinar on materials costs. "Very strong demand for steel and other metals because of the AI rollout," he said, adding that steel mills and fabricators are running at full capacity. Tariffs sit on top, and the combination has contractors doing something unusual: sourcing around steel.

Dean Lewis, Skanska's director of mass timber and prefabrication, said on the same webinar that clients are asking about alternative structural materials, mass timber among them, and data center customers specifically have shown a lot of interest as they weigh alternatives against a supply chain strained across the board.

Lewis said the timber frame itself generally costs more than its steel equivalent, with savings arriving later and elsewhere in the project. Skanska studied a three-story office building — not a data center — where the timber gravity frame exceeded its steel counterpart, and savings on the foundation, lateral system, finishes, facade and construction schedule eventually brought the two options close to cost neutral. A lighter structure permits reductions in the foundation and lateral systems, MEP work should carry no cost impact if integrated efficiently, interiors should save, and because mass timber arrives prefabricated, the schedule should compress as well.

The comparison exists because two escalation rates point in different directions. Lumber escalation runs 0% to 3% against steel's 25%, Park said, and that stability has survived tariff pressure on Canadian softwood, even though roughly a quarter of the softwood lumber consumed in the United States originates in Canada. Weak demand from residential housing, rather than the trade regime, is what has kept softwood lead times low. That suggests the timber option is underwritten by a soft housing cycle as much as by a hot AI cycle. Lumber accounts for 65% to 70% of mass timber input costs, according to François Robichaud, a partner for market intelligence on wood products and construction at Forest Economic Advisors, who said mass timber has "proven to be much more stable as of late" than steel.

There is a circularity here: the rush to build data centers and semiconductor plants pushed steel prices up and stretched fabrication lead times, by Park's account, so the same demand wave now has to route around the material it bid up. The alternative it is examining carries its own tariff exposure, its own concentrated input cost, and a parity argument that only works because residential construction walked away from the fiber.

Read without the materials jargon, Skanska described a market where structural steel for data center construction has become a long-dated item and the substitute is cost-neutral at best on first principles. A 55-week lead time is not a construction line item; it is carrying cost — capital parked in a half-finished building, against a delivery date that moves with a supply chain no developer controls. The data center capital stack splits between contracted hyperscaler capacity and merchant shells funded before they have a tenant; if that split holds, the merchant developer carries the clock most expensively, with no tenant rent arriving while the steel waits.

Skanska has appeared once in PWD's tracking, a fair measure of how rarely the materials supply chain surfaces in data center capital conversations. It belongs to the same family of gates as grid capacity and local consent — a queue no balance sheet shortens — with the difference that the steel queue is the one the industry can currently route around, at a price.

That price is worth paying only while the spread holds, and the spread has an expiry. Timber's stability rests on a housing market that is not buying lumber; a residential recovery puts data center developers in line behind homebuilders for the same fiber, and with lumber carrying that much of mass timber cost, a modest move there erases the advantage the webinar was describing. For a developer underwriting to a delivery date, the relevant number is not the steel price at signing but the steel price at erection, and that wait leaves room for it to change twice. The defensible reading of Skanska's numbers is that mass timber is a schedule hedge carrying a housing-cycle tail, and that the developers running the comparison now are doing it right for a reason that has less to do with timber than with having finally modeled the steel queue as a cost rather than a delay.

Watch the lead time. If steel comes back toward its pre-AI norm, mass timber returns to being an office-building story with an attractive carbon narrative and a cost-neutral frame. If the queue is still long when the next wave of shells goes out to bid, the material question moves out of a contractor's webinar and into the development pro forma, alongside the interconnection queue and the local consent calendar, where the buildout's real constraints already sit.