Data center costs jump 21% per megawatt

Between the fourth quarter of 2024 and the new 2026 edition of Cushman & Wakefield's development cost guide, the price of building a megawatt of data center capacity rose 21%, per IREI. The increase covers US and Canadian markets and reaches straight into the underwriting of every developer, lender, and LP sizing data center exposure.

The causes are familiar: supply chain constraints, skilled labor wage pressure, land costs, and escalation on critical components. John McWilliams of Cushman & Wakefield calls it a phase shift, with power, land, and labor access increasingly dictating where growth can happen. AI and cloud tenants continue to push an unprecedented development pipeline beyond traditional hubs into secondary, tertiary, and frontier markets.

The guide counts $2.3 trillion in global data center investment capital waiting in the development pipeline. Of that, $492 billion is under construction today. A 21% per-megawatt jump at that scale moves stabilized yields, debt service coverage, and the pre-lease point where a project makes sense.

Private real estate debt providers should push for tighter loan-to-cost structures and scrutinize developer contingency buffers more closely. Equity allocators face a sharper distinction: markets with deliverable power and labor, and places where the sticker price keeps climbing before a single server rack arrives.