Data center developers are facing increased construction costs, with annual escalation now projected at 3% to 6%, up from pre-2020 rates of 2% to 3%. While strong demand for AI workloads exists, developers must secure anchor tenants, ensure power certainty, and have credible delivery timelines to pass these higher costs onto clients. Labor shortages, particularly in electrical and mechanical trades, are exacerbating schedule and cost challenges, necessitating early engagement with trade partners and strategic procurement to manage risks. AI
IMPACT Rising construction costs and labor shortages could slow the pace of data center build-outs needed to support AI infrastructure.
RANK_REASON Industry report on construction costs and market dynamics impacting data center development. [lever_c_demoted from significant: ic=1 ai=0.7]
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- Data Center Knowledge
- Data Centers and Critical Environments
- Global Construction Costs Index 2026
- Jones Lang LaSalle
- Matthew Giddings
- North America
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