Trepp | Data Center Construction Spending Skyrockets

Spending for the construction of data centers was $41.1 billion last year, up 31.7% from 2024 and 344% from 2020, according to the U.S. Census Bureau.

That’s a big leap and a substantial chunk of change. However, it woefully underestimates the true cost of all the data center building that’s going on. Last year, properties with a 35-gigawatt capacity were under construction, up half again as much as the 22.9-GW capacity that was under construction in 2024. In 2020, properties with only 1 GW of capacity were in the works.

The Census Bureau’s spending data only looks at the cost to build a data center. In other words, material and labor. It excludes the cost of land, electrical infrastructure, cooling systems, computer equipment, or maintenance work—the costliest components of a data center project.

Land prices vary depending on location, but Alpha Matica, a London tech consultant, noted that land for data centers was being priced at roughly $244,000/acre nationwide. A data center typically needs more than 50 acres, which would mean a rough cost of $12.2 million.

Meanwhile, electrical infrastructure, which includes backup generators and other power distribution supplies, can account for about 50% of a project’s total cost, Alpha Matica found. A 100-megawatt property might face a cost of $450 million to $750 million for its required electric infrastructure. And cooling systems can account for 15% to 20% of a project’s total costs, or $135 million to $300 million.

That’s not all. The computer equipment, racks, and networking gear aren’t even factored into a property’s costs as they’re often unique to their tenant or operator. Still, a 100-MW facility might need up to $4 billion of equipment—that’s not a typo. And that doesn’t take into account potential upgrades, which are typically done every few years.

Colliers estimates that roughly $500 billion would be spent this year on data centers across the country.

So, who finances all that? Well, last year, roughly $13 billion of debt was raised through the CMBS market. That’s a drop in the bucket and is due to capacity issues. So, developers are turning to the asset-backed and private-credit markets. The latter is where the risk might lie given its relative lack of transparency.