For the first time, U.S. spending on information processing equipment has eclipsed spending on private residential investment, marking a significant shift in the nation's capital allocation. According to federal data reported by Fortune on Sept. 20, spending on information processing equipment reached $752 billion in the second quarter, edging past real private residential fixed investment of $748 billion. Residential investment has fallen 18% from its early 2021 peak, while computing spending has surged 51%. This milestone underscores the explosive growth of artificial intelligence infrastructure and its increasing dominance in the American economy.
Investor Daniel Kaufman, founder of the permanent capital holding company Kaufman & Company, said Wednesday that this spending imbalance should fundamentally change how AI campuses are built. He argues that housing for the workforce needed to operate these facilities must be planned from the start, rather than left to chance. "For the first time, this country is putting more money into the machines that run AI than into the homes people live in," Kaufman said. "I'm not here to fight that capital. We develop data centers ourselves. But every campus needs electricians, operators and their families living within a reasonable drive, and right now almost nobody is budgeting for those homes. That is how you lose a town hall, and it's how you lose a workforce."
The urgency of Kaufman's message is amplified by growing local resistance to data center development. In Utah, residents are challenging a county's approval of a $10 billion data center campus, and El Paso adopted new rules for data centers this summer. These pushbacks highlight the tension between the rapid buildout of AI infrastructure and the concerns of host communities, particularly regarding land use, resources, and local benefits. Kaufman & Company has a unique perspective, with stakes on both sides of the equation. Its venture arm, Kaufman Ventures, includes ServerDomes Global, which announced plans in July for geodesic dome data centers in Utah and El Paso, Texas, including a massive El Paso site spanning 24,000 acres. The domes are designed to use about 90% less water than conventional facilities, addressing one of the most contentious environmental issues associated with data centers.
On the housing side, Kaufman's platform includes DK Homes, Design Build Affordable, and the factory-built Mr Good Container Homes, and works with Oldivai, an aligned, independently led workforce housing partner. This integrated approach allows the company to develop housing alongside data centers, creating communities where workers can live near their jobs. "Communities are right to ask what they get in return for hosting this infrastructure," Kaufman said. "Our answer is that we don't want a blighted site with a fence around it. We want to build housing and other uses around the domes, and we want the people who keep those buildings running to be able to live near them. An investor who treats the housing as somebody else's problem is going to find the power, the permits and the people all harder to get."
The implications of Kaufman's stance are profound for the AI industry. As computing spending continues to outpace housing, the demand for data center capacity will only grow, but without adequate workforce housing, projects face delays, cost overruns, and community opposition. By integrating housing into campus plans, developers can mitigate these risks, ensuring a stable labor force and smoother approvals. Kaufman & Company's model, spanning residential development, workforce housing, AI infrastructure, and venture capital across 10 operating companies, demonstrates a viable path forward. With over 25 years of real estate experience and more than $2 billion in project value delivered, the firm is positioned to lead by example. As other developers watch, the question becomes whether they will follow suit or continue to treat housing as an afterthought—a decision that could determine the success of the AI buildout.
