AI boom strains data centre construction, costs rise

Turner & Townsend's 2025-2026 Data Centre Construction Cost Index, based on data from 52 global markets and a survey of over 280 industry experts, highlights a critical shift in the data center industry towards AI-driven facilities. 

Data centre

This move from traditional cloud-based centers to high-density, liquid-cooled infrastructure for AI workloads is creating significant challenges.
A substantial 83% of experts believe current supply chains are not equipped to deliver the advanced cooling technology essential for AI data centers.
Securing timely access to energy grids is the primary obstacle to completing data center projects on schedule, a challenge exacerbated by the increasing power demands of AI.
Global construction cost inflation for traditional data centers is projected at 5.5% for 2025 due to sustained high demand.
For the first time, a 7-10% construction cost premium has been identified in the USA for AI data centers compared to traditional ones, reflecting their increased technical complexity.
The report also advises clients to revise procurement models to strengthen supply chains and encourages innovation in energy-efficient designs to mitigate power connection delays.
In terms of cost, Tokyo and Singapore are the most expensive markets at USD 15.2 and USD 14.5 per watt, respectively, followed by Zurich at USD 14.2 per watt. Other major markets like Silicon Valley (USD 13.3 per watt), London (USD 12.0 per watt), and Frankfurt (USD 11.6 per watt) also feature among the highest.
Paul Barry, Data Centres Sector Lead, North America at Turner & Townsend, said: “Power availability remains a critical barrier, with long-lead times for grid connection the main constraint. There is also stronger competition than ever before for power due to both increased business and consumer demand, placing added pressure on grids. Developers and operators must adapt quickly to the evolving market landscape. AI data centres are more advanced, larger, and by extension, costlier. They come with greater power demands and modern cooling solutions. Clients need to navigate the power conundrum with greater openness to off-grid design solutions.”