Report: Canada’s data centre market to hit $16B by 2032

Key Takeaways:

• A multi-year data-centre build cycle is forming in major metros. Morningstar DBRS forecasts Canada’s data centre construction market will rise to $16.0 billion by 2032 from $9.6 billion in 2023, with the strongest pipeline in Toronto, Montréal, Vancouver and Calgary.
• Experienced, mission-critical contractors are best positioned—but contracts are the risk point. High barriers to entry (power/cooling complexity, uptime requirements, Tier certification, specialized supply chains and bonding) favour established players, while fixed-price and GMP contracts can expose builders to margin erosion, cash-flow pressure and liquidated damages if schedules slip.
• Policy and private capital are both accelerating demand, including mega-scale proposals. Federal support (including $2.4 billion over five years for AI/digital infrastructure) and hyperscalers’ shift to purpose-built campuses are driving activity, with proposals like Alberta’s Wonder Valley illustrating the potential scale.

The Whole Story:

Canada’s data centre construction market is expected to grow to $16.0 billion by 2032, up from an estimated $9.6 billion in 2023, with a project pipeline concentrated in Toronto, Montréal, Vancouver and Calgary, according to a Feb. 5 report from Morningstar DBRS.

The report said Canada’s data centre construction market is “primed for multi-year expansion” amid demand for cloud computing and data storage, alongside government support. “Data centre demand presents an enormous opportunity for Canada’s construction sector, especially for firms that have invested in the knowledge and training to execute on these large, complex facilities,” the report said.

Morningstar DBRS said it expects heightened demand for specialized construction services to be “positive for the credit profiles” of experienced participants, naming PCL Construction Group, EllisDon and Bird Construction, citing potential support for “backlog growth, revenue visibility, and margin resilience.”

At the federal level, the report pointed to the Canadian Sovereign AI Compute Strategy, saying it “has allocated $2.4 billion over five years toward domestic artificial intelligence (AI) and digital infrastructure buildout.” The policy framework, it added, “generally favours projects with meaningful Canadian ownership, engineering participation, and operational presence.”

On the private side, the report said major technology companies are shifting “rapidly from leased co-location facilities to purpose-built campuses engineered for high-density, AI-accelerated workloads.” These sites incorporate liquid cooling, expanded electrical redundancy, and on-site generation, the report said.

As an example of the scale of investment being proposed, the report cited the proposed Wonder Valley AI data centre campus in Alberta, describing it as “a $70 billion, 7,000-acre hyperscale development” that “would deploy up to 7.5 gigawatts of predominantly off-grid power” produced from natural gas. It said the project is still in the proposal and approvals stage and is positioned as “potentially the largest AI compute campus in the world.”

The report said data centre construction “differs substantially from conventional building work” because facilities integrate high-capacity power systems, advanced cooling technologies, and stringent performance and uptime requirements. It also said delivery schedules are typically strict and that “even minor workmanship or commissioning errors can lead to outages with significant financial consequences for contractors, which are often uninsured.”

Those conditions can raise the risks in fixed-price or guaranteed maximum price contracts. The report said “fixed-price or guaranteed maximum price (GMP) contracts carry heightened execution risk” because design changes, supply-chain delays or commissioning failures “can quickly erode margins and jeopardize schedule commitments.”

The report also described “high barriers to entry” tied to specialized supply chains and proficiency with certification requirements, including Uptime Institute Tier Certification processes. It said major national contractors such as PCL, EllisDon, Bird and Aecon “already possess the technical capabilities and likely the bonding capacity required for these projects,” along with a strong execution record.

Among key risks, Morningstar DBRS pointed to contract structures and cash-flow timing. It said data centre contracts often have large milestone payments tied to commissioning or phased turnover, and that supply-chain disruptions can create bottlenecks that delay schedules and “therefore, a contractor’s cash flow.” It also said owners may impose “stringent performance requirements and costly liquidated damages if deadlines are missed,” adding that limitations of liability can be a focus in negotiations.

Customer concentration is another risk, the report said, noting that contractors “with a material amount of revenue tied to the capital expenditure plans of a small number of large clients can be exposed to sudden demand shifts or supply chain shocks.”

Even with elevated investment, the report said project timelines can delay the point at which work translates into financial results. “Large-scale data centre projects typically involve lengthy planning, permitting, and design cycles before entering revenue-generating construction phases,” it said, adding that “it may take time” before the current surge converts into sustained earnings and cash flow contributions.

The report said successful participation in the build cycle will depend on “prudent working-capital management, tight control over labour and materials costs, diversification to limit revenue concentration, and rigorous oversight of execution risks inherent in fixed-price and GMP contracts.”