XXXXXXXXX ↓
XXXXXXXXX ↓
XXXXXXXXX ↓
XXXXXXXXX ↓
TRENDS
Stabilisation for traditional data centres, while AI costs are still to be fully determined
Data centre construction costs are set to climb modestly through 2026. However, there is a growing gap in the market between the two main classes of data centre. While construction costs for traditional cloud data centres have broadly stabilised – it is a different story for data centres designed to support AI workloads, where the cost variables are wide and extensive global benchmark data is not yet available.
Our data centre construction cost index for 2025 shows a 5.5 percent increase in the cost per watt of building a traditional cloud-based, air-cooled data centre. This is markedly lower than the 9.0 percent year-on-year increase we reported in our 2024 report. A large factor in this is the broader cooling in construction market cost inflation, as reflected in our Global construction market intelligence report for 2025, which showed an average rate of 4.2 percent inflation across the whole construction sector. The data centre market specifically – given how nascent much of the industry and supply chain still is in certain regions – also tends to benefit from lessening cost pressures over time as local supply chains become more established.
THE AI PREMIUM
On top of the core costs for traditional data centre construction shown in our index, which allows for the most accurate comparison between global regions, our latest analysis for projects within the US indicates there is a premium typically attached to higher-density, liquid-cooled data centres designed to support AI workloads. Using our global Hive platform, our analysis of similarly sized (by IT capacity) liquid-cooled data centres in the US, indicates that average construction costs are seven to ten percent higher than the equivalent air-cooled data centre (see Methodology for inclusions and exclusions).
These larger, more technically complex data centres are starting to gain ground in markets such as the US, UK, Europe and East Asia. These assets are more complicated builds, containing more costly technical and cooling systems required for their higher workloads.
INDICATIVE TREND 7-10% average cost premium of liquid-cooled data centres in the US (vs air-cooled and of similar IT capacity)
DENSITY
However, the higher costs of these systems are sometimes tempered by the different client requirements for these data centres, particularly power density. Some aspects of AI data centres are also simpler than cloud systems, where robust power resilience – via backup power sources and distribution – and other technical measures are needed to ensure uninterrupted service to clients. In managing the risk of downtime within cloud data centres, these redundancy requirements add cost that AI data centres may be able to minimise depending on their own specific reliability requirements.
AI data centres can, in some cases, afford to be more flexible, which can lower the cost of these designs. Increased power density often facilitates reductions in the building footprint required to deploy the same (or higher) IT loads. In addition, the larger ‘mega campuses’, which are specifically designed to deploy AI training models within multiple connected buildings, bring economies of scale when compared to single data centres (either on smaller campuses or part of an incrementally phased build-out) where those efficiencies are less likely to be achieved.
Below is an indicative average percentage allocation of construction costs for air-cooled versus liquid-cooled data centres in the US, spread across the main cost categories included within our data centre cost index.
The impact of added AI data centre construction costs can be inferred within the responses to our industry survey. Almost half (47 percent) of respondents reported bid/tender price rises in the past year between six and 15 percent – with a further 21 percent saying increases in fact exceeded 15 percent. This inflationary pressure shows few signs of easing. 60 percent of survey respondents expect construction costs to increase by 5 to 15 percent in 2026, and 21 percent still believe inflation will exceed 15 percent in the market next year.
Figure 2:
Percentage change in data centre construction tender/bid prices in your region over the past 12 months?
MARKETS
Consistency at the top of the table
The most expensive markets in our data centre construction cost index remain the same as our 2024 report. Tokyo, Singapore and Zurich are the three most expensive markets for data centre construction, at US$15.2, US$14.5 and US$14.2 per watt to build, respectively. These markets are typically more expensive due to local factors surrounding land availability, limited contractor pools and workforce dynamics. All three remain dominant hubs for data centre constructions in their respective regions.
Japan’s leading position is also reflected by the addition of Osaka to this year’s index. Osaka has emerged as the country’s secondary data centre market behind Tokyo. Its geographic location positions it as an ideal hub to serve much of western and parts of central Japan, and the high costs of building in and around Tokyo have also encouraged some data centre developers to shift attentions to Osaka and other secondary markets in the region.
Sitting just behind the East Asian leaders on the index are other well-established markets in the United States and Europe. Silicon Valley (US$13.3 per watt), New Jersey (US$12.9) and several in the Nordic region dominate the top 15 globally. Continued demand in these mature markets outstrips supply. The cost to build in Oslo, for example, is at US$12.4 per watt ranking as the seventh most expensive globally.
Figure 3:
Data centre cost index 2025 – index scores and US$ per watt
INSIGHT
Market momentum
Heating markets
- Atlanta
- Dallas
- Madrid
- Nordics
- Kuala Lumpur
- Mumbai
Cooling markets
- Silicon Valley
- Dublin
- Amsterdam
- San Francisco
- Singapore
MATURITY
Regional disparities reduce
Despite the dominance of traditional data centre construction hotspots, the global maturity of the industry is driving greater standardisation, with some historic regional disparities starting to reduce. Key European capitals which had historically placed lower on the rankings are now rising to meet comparable major American cities. The weakening US dollar has also increased the relative placement of EU locations in the index.
Paris and Amsterdam (both US$10.8 per watt) have risen six and seven places respectively, to rates more comparable with Portland (US$10.9 per watt). Madrid and Dublin (both US$10.0 per watt) have now overtaken Atlanta (US$9.9 per watt), Phoenix (US$9.8 per watt) and Columbus (US$9.8 per watt) – though all remain US hotspots with significant demand.
Showcasing the continued high demand across the traditional US tech corridors, Charlotte, North Carolina, has been added to the index this year, reporting costs of US$9.5 per watt. The country’s southeastern region is experiencing a broad uplift in commercial activity and population, contributing to a thriving economy. Within this, North Carolina is witnessing a surge in proposed data centre construction projects, buoyed by the state’s favourable tax incentives and relatively low electricity costs. Digital Realty’s three million sq ft, 400MW campus in west Charlotte, and Tract’s 400-acre data centre park, situated north of Charlotte, both demonstrate the burgeoning data centre construction boom in the region.
Maturing supply chains are helping to stabilise construction costs in newer markets. Lagos entered our 2024 index at seventh place, primarily due to the very high costs of setting up new supply chains and expertise in a market which had not traditionally developed data centres or similar projects. This year, with those skills and supply chains now more embedded, costs have settled significantly, and it now sits at 27th place with an average cost of US$10.5 per watt. Other new entrants to the market can be expected to see a similar initial cost spike, followed by a normalisation.
Contents
Follow us
