Data centre boom
Household spending fell -1.1 per cent in April, with discretionary spending posting its worst result in over two years, falling -0.8 per cent, as demand destruction begins to bite.
In truth, there aren't all that many bright spots in the Aussie economy, but the huge surge investment in building data centres (and related equipment spending for fit-outs) and is certainly one of them!
CapEx reports had been curiously soft up until December 2025, even though it had become obvious that planned expenditure was ramping up.
Finally we got a boost in the March 2026 quarter, with private new CapEx up 6½ per cent in the quarter, and up 14.6 per cent over the year.
Investment in IT & telco equipment is suddenly up more than 10-fold since the end of 2023 as the chart turns vertical.
Source: ABS
Sydney to lead investment
Where will the key data centre hubs be in Australia?
The main beneficiary is set to be Sydney, perhaps most notably Macquarie Park, Ryde, and Artarmon, as well as Rosehill, Parramatta, Marsden Park, and Horsley Park, and then multiple sites in Western Sydney, such as Eastern Creek, Erskine Park, Kemps Creek, and Mamre Road.
Melbourne has the advantage of swathes of flat and relatively accessible land in its Western suburbs and will evidently become a rapid growth challenger in the race for data.
The data centre boom will bring more employment, construction activity, and high-wages jobs to Sydney and Melbourne, for construction workers, electricians, and technicians, with further grid infrastructure to follow.
In time, there are expected to be economic multipliers and productivity gains across multiple sectors.
Brisbane, Perth, Adelaide, and Canberra will all see some investment in data centres, albeit at a lower scale and rate of growth.
Countries in Europe have lately been grappling with high power prices, now calling into question how energy-hungry data centres will impact the sector, while thirsty water use is another sustainability concern.
In other news, the Federal budget has apparently led to a continuing downtrend in polling for the ALP government, with interest groups lobbying hard for a walk-back in the capital gains tax proposals for businesses.
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