Data Center Construction Costs Rise Amid AI Expansion
A new index shows costs in Europe reached $12.76 per watt as power constraints and AI complexity pressure global supply chains.
Updated on Oct. 26, 2026 in Data Centers
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Turner & Townsend published its tenth Data Centre Construction Cost Index, showing Europe as the world's most expensive region for new facilities. Construction costs there have reached an average of $12.76 per watt following a 13% year-on-year increase.
Why it matters
Rising project costs are driven by the scale and complexity required to support AI workloads, which are pressuring labor and power infrastructure. As demand shifts, developers are facing significant constraints in securing the power necessary to deliver these projects.
Calculated for a typical 60MW design, costs range from $18.28 per watt in Tokyo, the most expensive market, to $5.79 per watt in Shanghai. Currently, 56% of industry experts cite power access as a primary obstacle to project completion.
The players
Turner & Townsend
A global professional services firm that provides consulting, project management, and cost benchmarking for infrastructure and data center construction.
The details
The cost index evaluates building expenses by benchmarking common specifications for a 60MW facility across 62 global markets. Rising expenditures in Europe are largely attributed to the strain on contractor capacity and the increasing technical requirements of modern data centers. These facilities are becoming more complex to meet the specialized cooling and power demands inherent in hardware designed for AI workloads.
Timeline
2026: The index recorded construction inflation exceeding 15% for approximately 20% of industry experts.
2027: Over half of respondents expect more than 50% of their projects to support AI-specific workloads.
The Tech Race
This report documents a pivot from standard cloud-scale facility construction to a race for AI-ready infrastructure. With 52% of projects projected to support AI by 2027, power scarcity and contractor competition are actively reshaping the global cost landscape.
Developers and stakeholders should anticipate continued cost volatility as power requirements for AI-centric designs force projects into more competitive supply chains. While costs vary widely by region, the industry-wide focus on energy security suggests that power-access strategies will define project timelines for the foreseeable future.
The takeaway
The industry is increasingly defined by its ability to secure power, with over half of experts calling it a major project blocker. Track the 2027 project pipeline to see if cost inflation stabilizes as more facilities transition to AI-supported designs.
Further reading
For broader trends in infrastructure scalability, visit the Data Centers section.
Live Poll
Do you believe rising data center construction costs will lead to higher digital service prices?
