TRENDS
Commercial landscape
Data center delivery costs remain high as AI demand, labor shortages and capacity constraints reshape global construction markets.
Inflationary pressure easing
Construction activity across the global data center industry remains incredibly busy. However, the double-figure inflation that our 2025 survey respondents anticipated for 2026 has been varied across global markets, reflecting the trend towards easing inflation across the broader construction industry. Markets and sectors have adapted in the face of recent global economic shocks, building more resilient supply chains.
Despite this stabilization, it is now clear that structurally higher construction costs are here to stay, and risk is increasingly priced into contracting. This, alongside deepening skill shortages which put pressure on labor costs, poses a challenge to the sector, and clients must embrace new approaches to ensure strong commercial performance.
While many constraints remain, rising costs of data center construction now tend to be driven by the growing scale of the builds, which increasingly require alternative delivery approaches and increased leadership talent to overcome strained capacity and accelerate schedules.
Overall spend associated with project acceleration measures and alternative delivery models influences the average cost per Watt independently of the broader inflation impact.
Cost inflation varies across regions
- In 2026, 52% have experienced cost increases above 6%, with approximately 20% reporting inflation above 15%.
- Our index suggests that higher inflation is more prevalent in North American and European markets, where average cost-per-Watt has increased by 13% year-on-year. That’s double the global average rate of 6%.
- In 2027, 28% of survey respondents expect inflation to be between 1-5%, indicating an expected continued softening of cost pressure. 57% expect it to be below 15%.
Figure 1:
On average, over the past 12 months, how have data center construction tender/bid prices changed in your region, compared with the previous year?
Figure 2:
How do you expect data center construction costs in your region to change over the course of 2027 when compared to 2026 costs?
Figure 3:
Global data center construction cost index (US$ per Watt)
We feature 62 markets in this year’s index, providing an indicative cost per Watt, based on a typical 60 MW design.
The 12 new markets
- Hong Kong
- Rio de Janeiro
- Monterrey
- Indianapolis
- Barcelona
- Tulsa, Texas
- Johor Bahru
- Qatar
- Bangkok
- Manila
- Taipei
- Ho Chi Minh City
A snapshot of key markets
Japan maintains its leading cost position
Tokyo (US$18.28 per Watt to build) has topped the data center construction cost table for the fourth year running. The country has cemented itself as both a regional and global digital powerhouse, and Osaka’s growth as the nation’s secondary data center market (now at US$17.15 per Watt to build) and leading hub in its own right is helping build capacity to fuel Japan’s digital ambitions.
Europe and North America dominate the top half of the index
Japan may hold the top spot in the index, but the fact that 17 European and 13 North American markets make up almost half of the total table reflects these markets’ continued dominance in the industry. North America is estimated to host around half of all global data center, with Europe hosting at least a further quarter.
Access to power, water and cool climates attract investment
Chicago (US$13.28 – 11th overall) jumps up the index having seen demand buoyed by AI facilities in surrounding states which benefit from access to affordable power and an attractive climate for high density designs. The level of construction activity in these surrounding states is now potentially constraining labor supply in the local Chicago market. A similar pattern applies to markets like Columbus and Indianapolis.
These qualities, cold weather and utilities access, are equally driving demand in Europe in the Scandinavian and Nordic countries, even as this causes costs to rise as construction capacity becomes squeezed. Copenhagen (US$14.41), Oslo (US$13.95), Stockholm (US$13.92), and Helsinki (US$13.33) are now all within the top ten on the index.
Falling costs as emerging markets mature
Lagos was a new addition to the index in 2024, and it has since continued to drop down the cost rankings globally – from 7th initially to 27th last year and now 42nd – as the supply chains mature and a local specialist talent pool expands. The average cost to build per Watt is at US$10.87, more in tune with other African markets such as Cape Town (US$10.70) and Nairobi (US$10.03), where relatively affordable labour costs and ready access to land helps to keep costs down.
Typical factors in mature vs. emerging markets
Skilled labor shortages continue to drive costs
Traditionally, access to skilled labor has been one of the biggest factors impacting project costs, with shortages in many regions keeping upwards pressure on wages as projects compete for talent. Specialist experts in regions come at an increasingly high cost base.
- 81% of survey respondents report that skilled labor in their region is either moderately or highly constrained.
In the data center sector, the skills most in demand tend to be mechanical, engineering and plumbing trades (MEP). With many data center projects involving on-site generation and grid improvements, the spotlight is increasingly turning to electrical experts.
Figure 4:
How would you characterize skilled labor availability for data center projects in your region?
Figure 5:
How would you assess the capacity of the contractor market in your region to meet current demand for data center projects?
Investment picture
Regardless of the labor costs, capital investment continues to flow into the data center sector at unprecedented rates, particularly fueled by the drive for greater AI computing capacity.
Capital expenditure on data centers is already US$800bn per year, and is expected to reach US$1.8tn by 2050. This exponential growth of investment risks coming head-to-head with the reality of capacity and supply chain limitations.
- Our 2026 Global Construction Market Intelligence Report revealed that data center are the most constrained construction subsector in terms of contractor capacity.
Overall, only half of survey respondents (52%) believe that contractor capacity is manageable for now, though tight. Capacity is more stretched in the results for specific regions:
- Only 26% of North American respondents believe regional capacity is sufficient (or more than sufficient).
- In the UK and Europe, this falls to just 19%.
scale
The cost dynamics of scale
The computing demands of AI technologies, requiring gigawatt-level power and liquid cooling for increased rack densities, is one of several factors driving larger-scale data center across the board.
As data center developments grow in size and ambition, labor and equipment constraints and infrastructure bottlenecks are limiting some of the cost efficiencies that might traditionally be expected.
The ultimate result is that scale alone is no longer a guarantee of lower per-Watt costs – and in fact can drive a cost premium. The organizations best positioned for success will be those that can combine scale with certainty and reduce these key risks.
Figure 6:
Select the three biggest challenges in achieving your committed project schedule(s)
Factors limiting economies of scale
Market supply and demand imbalances can limit contractors pricing efficiencies on larger projects and campuses.
Flexible designs for future needs and technologies increase complexity and cost.
Greater schedule uncertainty on larger projects drives higher risk premiums.
Planning, power and design scope changes are the biggest schedule risks identified in our survey.
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