Data Center Development Cost Guide 2025

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UNITED STATES

COST GUIDE 2025 DATA CENTER

DEVELOPMENT

DATA CENTER DEVELOPMENT COST GUIDE 2025

KEY FINDINGS

POWER AVAILABILITY HAS BECOME AN INCREASINGLY PRESSING CHALLENGE IN ESTABLISHED DATA CENTER MARKETS, limiting the market’s ability to meet demand. As a result, data center developers have shown greater interest in emerging and tertiary markets, where power availability is less of a concern. THE WEIGHTED AVERAGE COST OF DATA CENTER LAND THROUGH OCTOBER 2024 WAS $5.59 PER SQUARE FOOT (PSF) OR $244,000 PER ACRE, reflecting a decrease of $0.90 psf ($39,000 per acre) compared to the previous year. That said, average U.S. data center land prices for parcels 50 acres or larger have increased 23%, from $4.39 per square foot (psf) in 2023 to $5.40 psf in 2024 through October. DATA CENTER LAND TRANSACTIONS ARE GROWING IN SIZE. In 2024, the average parcel spanned 224 acres—a 144% increase since 2022. This growth is largely driven by data center developers looking to develop multi-building campuses, enabling phased development and future expansion to reach on-site capacity thresholds amid high demand. BUILDING AND CONSTRUCTION COSTS ARE STILL RISING BUT AT A SLOWER RATE COMPARED TO RECENT YEARS, signaling a deceleration in the pace of increases.

Cushman & Wakefield

DATA CENTER DEVELOPMENT COST GUIDE 2025

CONSTRUCTION COSTS COSTS REMAIN HIGH BUT ARE DECELERATING

UNITED STATES: COSTS INDICES (JAN-2020 = 100)

Oct-24

140

135

130

125

120

110 115

105

100

Jul-21

Jul-19

Jul-22

Jul-23

Jul-24

Jan-21

Jul-20

Mar-21

Jan-19

Mar-19

Sep-21

Sep-19

Nov-21

May-21

Jan-22

Jan-23

Jan-24

Mar-22

Mar-23

May-19

Mar-24

Jan-20

Mar-20

Sep-22

Sep-23

Sep-24

Nov-22

Nov-23

May-22

May-23

Sep-20

May-24

Nov-20

May-20

Building Cost Index

Construction Cost Index

Common Labor Index

Skilled Labor Index

Index

2021-2023 CAGR

YOY - OCT ‘24

Change

Building Cost

8.7%

1.8%

-6.9%

Construction Cost

5.1%

1.0%

-4.1%

Common Labor

1.4%

1.8%

+0.4%

Skilled Labor

2.9%

0.9%

-2.0%

Source: Cushman & Wakefield Research, Moody’s Analytics: Engineering News Record (ENR) (McGraw-Hill)

Building and construction input costs increased sharply after the pandemic, driven by material shortages caused by supply chain issues alongside sustained demand. Between October 2020 and October 2021, building costs rose by 14% and construction costs by 8%. As of October 2024, costs remain elevated, but the rate of escalation has slowed drastically, with the Building Cost Index (BCI), Construction Cost Index (CCI) and Skilled Labor Index (SLI) showing lower growth rates over the past year.

Skilled labor costs grew at an above-average rate following the initial pandemic reopening, with a compound annual growth rate (CAGR) of 2.9% from 2021 to 2023 compared to 2% from 2017 to 2019. As of October 2024, the Skilled Labor Index (SLI) exhibited slower growth at 0.9% year-over year (YOY), while common labor costs rose at a slightly higher rate of 1.8% YOY—0.4% above the annual growth from 2021 to 2023.

Cushman & Wakefield

DATA CENTER DEVELOPMENT COST GUIDE 2025

RISING CONSTRUCTION COSTS

UNITED STATES: DATA CENTER DEVELOPMENT BREAKDOWN

Data Center Construction Costs Breakdown

Lead Time (Weeks)

may require project managers to adjust labor schedules, potentially leading to increased labor costs due to extended work periods or overtime. In addition, fluctuating input costs during prolonged lead times for materials and equipment frequently require budget revisions. For example, uninterruptible power supplies (UPS) ordered at the end of the third quarter in 2023 would cost 15% more by their delivery 28-36 weeks later. While lead times have improved compared to the immediate post critical to data center development. Switchgear—essential for ensuring uninterrupted power supply, load balancing, fault protection and overall operational stability of the datacenter—has the longest lead times, averaging 46-48 weeks. Generators and chillers are also difficult to obtain, with lead times exceeding 30 weeks and, in some cases, stretching up to 110 weeks. 2 pandemic years, they remain elevated for certain materials

Switchgear Chillers

DC Shell ($/SF) 21%

30 30

Generators CRAHS DM CRAHS ER Pre Fab Skids UPS CX Boards Transformers PDUs Battery Cabinets Copper Wire Steel Light Fixtures Glass Aluminium Insulation Lumber PVC Plumbing Gypsum

Site ($/ Developed Acre) 10%

28 28 28 28

36 36 36 36

White Space Buildout ($/MW) 10%

24 24

32 32

Critical Capacity ($/MW) 53%

Back Of House ($/SF) 4%

Office Buildout ($/SF) 2%

Most data center construction costs are attributed to building out the facility’s critical capacity, while office space accounts for the least capital investment. Extended lead times affect data center development by influencing scheduling, cost variation and resource allocation. Prolonged lead times for materials or equipment can delay project timelines, causing a chain reaction across all construction stages. Such delays

3 3

Concrete 0 2 1

Source: Cushman & Wakefield Research, Turton Bond

2 HITT, DPR, and Clune, in addition to Turton Bond, have contributed data on construction materials, labor pricing, and lead time data.

Cushman & Wakefield

DATA CENTER DEVELOPMENT COST GUIDE 2025

CONSTRUCTION COSTS BY MARKET

SELECT MARKETS: DATA CENTER CONSTRUCTION COST PER MW

$16

$15.0

$15

$14.3

$14.2

$14.1

$13.9

$13.7

$14

$13.4

$13.2

$13.0

$12.9

$13

$12.6

$12.4

$12.3

$12.2

$12.1

$11.9

$12.5

$12

$11

$11.1

$11.0

$10.8

$10.6

$10

$10.4

$10.1

$10.0

Millions USD/MW

$9.8

$9.7

CONSTRUCTION COST COMPONENTS

$9.5

$9.4

$9.3

UNITED STATES: MATERIAL COST CHANGES

Reno

Dallas

Austin

Omaha

Material Cost Changes Index (Q3 2021 = 100)

Impact of Lead Time on Material Cost Index

Atlanta

Newark

Virginia

Phoenix

Chicago

Portland

Cheyenne

Las Vegas

Columbus

Des Moines

Wenatchee

Kansas City

San Antonio

Salt Lake City

San Francisco

Low (U.S. $M/MW)

Mid (U.S. $M/MW)

High (U.S. $M/MW)

160

115

110

150

Source: Cushman & Wakefield Research, Turton Bond

105

140

100

130

30+ Weeks → +6%

30+ Weeks → +5%

46+ Weeks → +14%

28+ Weeks → +15%

28+ Weeks → +9%

28+ Weeks → +7%

Across 19 markets, the cost to develop one megawatt (MW) of critical load varied from $15 million in Reno on the high end to $9.3 million in San Antonio on the low end, with an average of $11.7 million. Texas emerged as a cost-effective option compared to other data center markets, as Dallas, Austin and San Antonio recorded lower costs per MW than any of the other 16 markets analyzed. This cost advantage can be attributed to Texas’ business-friendly regulatory environment, attractive incentive packages, reasonable site acquisition costs and access to affordable labor. The construction cost analysis in the above chart excluded typical owner-furnished contractor installed (OFCI) equipment purchases, end user/ tenant costs, operational costs, land acquisition,

design/soft costs and owner-held contingencies. Therefore, the affordability of land in markets like Des Moines and Reno was not factored in. These two markets, however, faced inflated labor expenses, largely due to the lack of skilled local labor, requiring developers to offer incentives and cover travel expenses to bring in workers. Virginia, home to the largest data center market, ranked as the seventh least expensive among the 19 markets. Its data center-friendly environment and long-standing industry presence have fostered economies of agglomeration, where clusters of data center activity drive cost efficiencies for developers, owners, operators and tenants, ultimately creating a competitive market.

120

110

UPS

100

Chillers

Q3 2021

Q2 2022

Q1 2023

Q4 2023

Q3 2024

CX Boards

Generators

Switchgear

Transformers

Switchgear CX Boards

Generators

Transformers

Order Date Cost (Q3 2023)

Cost After Lead Time

UPS

Chillers

Note: Indexed values – Q3 2023 = 100 Source: Cushman & Wakefield Research, Turton Bond

Source: Cushman & Wakefield Research, Turton Bond

Since the pandemic, strained supply chains have made materials acquisition difficult and more expensive. Since the third quarter of 2021, switchgear prices have risen by 50%. This cost surge extends to a variety of materials required for data center construction, including generators

(+45%), transformers (+44%), CX boards (+31%), UPS (+48%) and chillers (+40%). These price escalation0s, combined with elevated labor expenses, have directly driven up data center development costs.

Cushman & Wakefield

DATA CENTER DEVELOPMENT COST GUIDE 2025

DATA CENTER LAND OVERVIEW DATA CENTER LAND PRICING

NORTH AMERICA: DATA CENTER LAND TRANSACTIONS 2014-2024

NORTH AMERICA: DATA CENTER LAND TRANSACTIONS 2015-2024

Hyperscaler vs. Colocation Provider Pricing

Established vs. Non-Established Markets

$1,000.00

$20

$100.00

$15

$10.00

$10

$ / SF

$1.00

Weighted Avg ($ / SF)

$0.10

$0.01

2017

2021

2017

2015

2021

2018

2015

2019

2016

2018

2019

2016

2022

2023

2020 2024 Hyperscaler Pricing Colocation Provider Pricing 2022 2023

2024

2020

Nov-13

Apr-15

Aug-16

Jan-18

May-19

Oct-20

Feb-22

Jun-23

Nov-24

Established Markets Non-Established Markets

Note: Bubble size corresponds to acres sold Source: Cushman & Wakefield Research

Note: Data center land transactions with minimum 10 acres, Hyperscalers = Apple, AWS, Google, Meta, Microsoft

Source: Cushman & Wakefield Research

Data center demand is heightened as AI, cloud storage and an increasingly digitalized world outpace the available market capacity, confirming undersupply conditions are a norm in the industry. Developers are turning to emerging and tertiary markets with available land and power, while most established markets face shortages of both. Major players in the data center industry are aggressively pursuing larger parcels, especially those with power commitments in place, to accommodate future expansion and capture pent-up demand. With limited suitable options in dominant data

center markets and upward pressure on land values, interest has shifted toward rural areas where suitable options are more abundant and affordable. Despite the interest in powered land, developers continue to acquire prime parcels in strategic locations, with plans to secure power later through local utilities, renewable energy farms or small modular reactors. As a result, average U.S. data center land prices for parcels 50 acres or larger have increased 23%, from $4.39 per square foot (psf) in 2023 to $5.40 psf in 2024 through October. 1

Hyperscalers currently hold a significant advantage over many colocation providers in site acquisition due to their superior access to capital and ability to self-fund. This financial strength allows hyperscalers to outcompete colocation providers, especially for highly desirable powered-land sites. By avoiding the impact of higher interest rates, hyperscalers can make more attractive offers while still seeking ways to reduce costs. This has driven their focus to the outskirts of established markets and into emerging markets where land and power availability are less constrained, helping to stabilize average prices. For example, AWS recently purchased over 1,000 acres in Fredericksburg, Virginia, while Microsoft

acquired roughly 500 acres in Plano, Illinois, just west of Chicago. The capital advantage of hyperscalers is also evident in their ability to secure highly sought after powered land sites. From 2022 to 2024, the cost of such sites (10 acres or more) for hyperscalers rose from $2.89 psf to $5.38 psf as demand for data centers continues to grow in the generative AI era. In contrast, colocation providers have seen the weighted average cost of comparable land fall from $14.10 psf in 2022 to $5.68 psf in 2024. The higher prices paid by colocation providers often reflect their acquisition of higher-value land in more urban environments.

1 L and price data is based on a wide swath of geographies, where site plan is approved, or special exception is approved for rezoning.

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DATA CENTER DEVELOPMENT COST GUIDE 2025

SITE ACQUISITION COST RANGE

DATA CENTER PARCEL SIZE

SELECT MARKETS: LAND PRICING RANGE (2022-2024)

NORTH AMERICA: DATA CENTER LAND TRANSACTIONS 2015-2024

Average Parcel Size Acquired

Parcel Size Acquired by Market Type

Established Markets

Emerging Markets

$35

1,200

$30

1,000

$25

800

$20

600

$ / SF

$15

Acres

400

$10

200

2022

<2021

2023

2024

2021

Chicago Phoenix Virginia Atlanta Columbus Carolinas Oregon Iowa

Indiana Minneapolis

$35.08 $22.50 $18.86 $8.04 $3.56

$1.17

$0.92 $1.49

$2.61 $2.47

$1.91 $3.10

$1.38 $1.63

Median

2017

2021

2015

2018

2019

2016

2022

2023

2024

2020

Acres Acquired Avg Parcel Size

Established Markets Emerging + Tertiary Markets

$4.24 $1.33

Weighted Avg $11.85 $20.08 $9.06 $5.93

Note: Established and emerging markets with few transactions not displayed Source: Cushman & Wakefield Research

Note: Site acquisitions overs 1,200 acres not shown Source: Cushman & Wakefield Research

Source: Cushman & Wakefield Research

Despite market expansion, densely populated established markets still command a premium compared to emerging and tertiary geographies. These markets offer several advantages, including dense and diverse fiber networks, low latency, robust infrastructure and generous government incentives. Urban data centers benefit from close proximity to end users, reducing latency and making them ideal for applications like autonomous vehicles, IoT, content delivery, financial trading, gaming and healthcare.

However, their urban locations and limited availability often lead to fierce competition from buyers outside the data center industry, further driving up prices. Markets like San Francisco, Phoenix and Northern Virginia often outprice more rural markets in the Midwest. In-market hubs like Elk Grove Village in Chicago remain hotspots for data centers, commanding a premium over other regional sites. Over the past three years, the median price of land in Chicago has been more than 13 times higher than in Iowa.

As securing ample power resources becomes more challenging, buyers are increasingly drawn to sites capable of accommodating future expansion. In line with this trend, the average size of data center sites has grown over the past three years. As of October 2024, the average acquired parcel spans 224 acres—a 144% increase since 2022. This trend toward larger parcels is present in both emerging and established markets, with average acreage site sizes this year reaching

190 acres in established markets and 340 acres in emerging and tertiary markets. The rise of AI has further boosted the appeal of emerging and tertiary markets for data center operations. While these markets often have slightly higher latency, ultra-low latency is not always a necessity for AI users, unlike edge data center applications.

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DATA CENTER DEVELOPMENT COST GUIDE 2025

LABOR

DATA CENTER LABOR AVAILABILITY

UNITED STATES: DATA CENTER-RELATED OCCUPATIONS

Electrical Engineers & Technicians

Portland

2.7

Seattle Austin

2.5

2.4

10K

Kansas City San Francisco

1.8 1.8 1.8

Reno

Denver Boston Dallas

1.7

1.6 1.6 1.6

13K

Columbus Charlotte Phoenix Minneapolis Salt Lake City Indianapolis Des Moines Los Angeles Las Vegas Wenatchee Washington DC

1.5 1.5 1.5

1.4 1.4 1.4

17K

1.2 1.2

1.1 1.1 1.1

Nashville

1.0

Atlanta

0.9 0.9

18K

New York Chicago

Total Resident Workers Resident Workers Per 1,000 Capita

Source: Cushman & Wakefield Research, Lightcast

The rapid proliferation of data centers across North America has strained access to both power and the specialized labor pool needed to build and operate these facilities. In some markets, securing an adequate workforce has become a challenge. Given the high capital expenditure required to develop these facilities, it’s important that companies ensure talent availability and mitigate labor risks to avoid prolonged construction timelines and unexpected labor costs increases. Among the top 24 U.S. data center markets, New York claimed the largest labor force in three of the four workforce categories analyzed, while Wenatchee, Washington, with a much smaller population, had the smallest. However, on a per capita basis, New York ranked among the bottom five across categories despite its high absolute numbers. Austin led in resident workers per capita, followed by Denver and Des Moines. Larger metros like New York, Los Angeles and Chicago struggled with per capita talent, with Austin nearly doubling their talent per capita. Overall, construction workers were the most abundant, with over 757,000 resident workers across the 24 markets, followed by information technology (407,000), technicians (227,000) and electrical engineers and technicians (153,000).

Cushman & Wakefield

DATA CENTER DEVELOPMENT COST GUIDE 2025

DATA CENTER LABOR AVAILABILITY

UNITED STATES: DATA CENTER-RELATED OCCUPATIONS

Information Technology

Technicians

Austin

Portland

6.1

4.3

15K

11K

Seattle Austin

Washington DC

6.0

3.7

38K

Seattle

3.1 3.1

5.7

13K

23K

Des Moines

Salt Lake City Minneapolis

5.5

11K

Denver

5.4

3.0 3.0

16K

Reno

Charlotte Columbus Indianapolis Kansas City Minneapolis

5.1

11K

San Francisco

4.9

2.7 2.7

14K

12K

Boston

4.7 4.7

10K 10K

13K

Kansas City

2.6 2.5

Denver

4.5

17K

Dallas

Columbus

4.4

2.4

36K

San Francisco

Phoenix

4.1

2.3 2.3

19K 19K

12K

3.9

Boston

Des Moines

3.4

2.2 2.2

18K

Atlanta Chicago Phoenix Nashville Portland

Dallas

3.3

Charlotte

3.2 3.2 3.1

2.0 2.0 2.0

16K

13K

Washington DC

20K

25K

Los Angeles Indianapolis Wenatchee

30K

2.9

1.7

Salt Lake City

2.7

1.6 1.6

55K

Las Vegas Nashville Atlanta Chicago New York

New York

2.3

29K

Los Angeles Wenatchee

1.5

2.2

14K

1.8 1.8

1.4

Las Vegas

1.2

24K

Reno

Total Resident Workers Resident Workers Per 1,000 Capita

Source: Cushman & Wakefield Research, Lightcast

Cushman & Wakefield

DATA CENTER DEVELOPMENT COST GUIDE 2025

DATA CENTER LABOR AVAILABILITY

UNITED STATES DATA CENTER MARKETS: MEDIAN HOURLY LABOR COST

Columbus; $44

San Francisco; $63

Nashville; $42 Reno; $39

Denver; $51

Information Technology

Seattle; $60

Dallas; $35 Nashville; $36

San Francisco; $57

Electrical Engineers & Technicians

Minneapolis; $45

Reno; $31

Seattle; $56

Dallas; $33

San Francisco; $49

Technicians

Nashville; $32 Reno; $31

Kansas City; $41

Seattle; $52

Dallas; $25 Nashville; $25

San Francisco; $45

Construction

Minneapolis; $39 Boston; $42

Construction

Wenatchee; $31

$10

$20

$30

$40

$50

$60

$70

$80

Salt Lake City

12.2

15K

Established Emerging Tertiary

Reno

11.7

Denver

11.2

34K

Note: Geographies limited to established, emerging and tertiary data center markets Source: Cushman & Wakefield Research, Lightcast

Des Moines

11.0

Charlotte Phoenix

10.2

28K

9.9

50K

Austin

9.6

24K

The high demand for data center occupations has intensified competition for the specialized talent needed to run these facilities, driving wages higher. Although data centers don’t command a large labor force to maintain operations, the need for 24/7 coverage increases workforce requirements and, ultimately, labor costs. The diverse geographies where these assets are being developed results in varying labor costs across occupational segments. However, across markets, internet technology professionals consistently command the highest compensation across markets, with hourly wages ranging from $39 to $63. San Francisco, one of the most expensive

U.S. cities, ranked as the costliest market in every labor segment except technicians, while nearby Reno offered the lowest wages in all categories except construction. Overall, labor costs in San Francisco were 30% above the average, reflecting the region’s higher cost of living and competition for technology talent from Silicon Valley. Conversely, Reno provided an 18% cost advantage for local labor. Unsurprisingly, established markets reported higher labor costs compared to emerging and tertiary markets. 3

Wenatchee Indianapolis

8.7

19K

8.6

Las Vegas Nashville

8.5

18K

8.3 8.1

19K

Seattle Dallas

67K

7.9

32K

7.7

19K

Portland

7.5

17K

Columbus Minneapolis Kansas City

7.4

28K

7.2 7.1 7.1

16K

46K

Washington DC

35K

Boston Atlanta

6.2

39K

5.9

27K

San Francisco

5.5

52K

New York Chicago

4.9

100K

4.6

59K

Los Angeles

Total Resident Workers Resident Workers Per 1,000 Capita

3 Availability of labor significantly impacts cost. In some markets, utility/technician tradesmen are in short supply and are experiencing an aging workforce.

Source: Cushman & Wakefield Research, Lightcast

Cushman & Wakefield

CONTACTS JOHN McWILLIAMS Head of Data Center Insights, Research Manager john.mcwilliams@cushwake.com ETHAN TRIBBLE Research Analyst, Global Research ethan.tribble@cushwake.com ADRIAN CONFORTI Northeast Region PDS Lead adrian.conforti@cushwake.com JASON D’ORLANDO Industrial, Life Sciences, and Mission Critical Lead,

Project & Development Services jason.dorlando@cushwake.com

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.

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