Data Center Development Cost Guide 2025

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

$13.4

$13.2

$13.0

$12.9

$13

$12.6

$12.4

$12.4

$12.3

$12.2

$12.1

$12.1

$11.9

$12.5

$12

$11

$11.1

$11.1

$11.0

$10.8

$10.8

$10.6

$10

$10.4

$10.4

$10.1

$10.0

Millions USD/MW

$9.8

$9.7

$9.7

$9.7

CONSTRUCTION COST COMPONENTS

$9.5

$9

$9.4

$9.4

$9.3

$8

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.

95

120

90

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.

8

9

Cushman & Wakefield