TRENDS
Commercial landscape
Data centre delivery costs remain high as AI demand, labour shortages and capacity constraints reshape global construction markets.
Inflationary pressure easing
Construction activity across the global data centre 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 stabilisation, 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 labour 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 centre 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/watt independently of the broader inflation impact.
Cost inflation varies across regions
- In 2026, 52 percent have experienced cost increases above 6 percent, with approximately 20 percent reporting inflation above 15 percent.
- Our index suggests that higher inflation is more prevalent in North American and European markets, where average cost-per-watt has increased by 13 percent year-on-year. That’s double the global average rate of 6 percent.
- In 2027, 28 percent expect inflation to be between 1-5 percent, indicating an expected continued softening of cost pressure. 57 percent expect it to be below 15 percent.
Figure 1:
On average, over the past 12 months, how have data centre 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?
Global data centre construction cost index
We feature 62 markets in this year’s index, providing an indicative cost per watt and index score, based on a typical 60 MW design.
The 12 new markets
· #14 Hong Kong
· #20 Rio de Janeiro
· #23 Monterrey
· #31 Indianapolis
· #34 Barcelona
· #46 Tulsa, Texas #46
· #49 Johor Bahru
· #53 Qatar
· #55 Bangkok
· #56 Manila
· #57 Taipei
· #60 Ho Chi Minh
Many of these markets have entered the index in the bottom half of the table. This is indicative of global trends that can help to keep data centre costs lower in certain markets, namely accessibility to abundant land and power, attractive government incentives, and the ability to draw on well-established supply chains.
A snapshot of key markets
Japan maintains its leading position
Tokyo (US$18.28 per watt to build) has topped the data centre 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 centre 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 continue to dominate the table
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 centres, with Europe hosting at least a further quarter.
Access to power, water and cool weather 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 labour 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 labour shortages continue to drive costs
Traditionally, access to skilled labour 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 percent of survey respondents report that skilled labour in their region is either moderately or highly constrained.
In the data centre sector, the skills most in demand tend to be mechanical, engineering and plumbing trades (MEP). However, with some data centre projects beginning to include their own on-site generation and local grid improvements, the focus is increasingly on electrical experts.
Figure 3:
How would you characterise skilled labour availability for data centre projects in your region?
Figure 4:
How would you assess the capacity of the contractor market in your region to meet current demand for data centre projects?
Investment picture
Regardless of the labour costs, capital investment continues to flow into the data centre sector at unprecedented rates, particularly fuelled by the drive for greater AI computing capacity.
Capital expenditure on data centres is already US$800 billion per year, and is expected to reach US$1.8 trillion 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 centres are the most constrained construction sub-sector in terms of contractor capacity.
Overall, only half of survey respondents (52 percent) believe that contractor capacity is manageable for now, though tight. Capacity is more stretched in the results for specific regions:
- Only 26 percent of North American respondents believe regional capacity is sufficient (or more than sufficient).
- In the UK and Europe, this falls to just 19 percent.
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 centres across the board.
As data centre developments grow in size and ambition, labour 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 organisations best positioned for success will be those that can combine scale with certainty and reduce these key risks.
Figure 5:
Select the three biggest challenges in achieving your committed project schedule(s)
Factors limiting economies of scale
Labour shortages 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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