Data Center Costs Hit $541/Sq Ft, Up 31%, as Starts Concentrate in South

Data Center Costs Hit $541/Sq Ft, Up 31%, as Starts Concentrate in South

Data center construction costs are rising faster than the buildings themselves, according to ConstructConnect’s November data center report, published Oct. 30 and covered by Construction Today. The median cost of a US data center project was $540.96 per square foot from January through September 2026, 31% higher than a year earlier.

Market Impact

ConstructConnect says data center starts totaled $9.4 billion across 18 US projects in September, less than half of August’s revised record of $25.8 billion. That pulled the 12-month moving average down to $14.9 billion. Year to date, starts reached $135.8 billion across 178 projects, and the firm says 2026 is on pace to exceed $180 billion, roughly $20 billion above its own latest full-year forecast. Data centers account for 27% of the $500.2 billion in US nonresidential building starts this year.

Over five years, the median cost per square foot has grown at a compound annual rate of 16.2%. The average project in the sample now costs $1.3 billion and covers 1.1 million square feet. ConstructConnect says the cost increase outpaces the growth in building size, but it does not break down what is driving it. The analysis covers only projects where both price and square footage are known, so the median reflects that sample rather than every data center start.

Where the Work Is

ConstructConnect says 2026 spending is concentrated in three areas: the rust belt from Wisconsin through Ohio, with more than $40 billion in starts, the South Atlantic at $36.2 billion, and the West South Central region, including Texas and Arkansas, at $33.6 billion. September’s largest starts were two projects worth $2 billion each, one in Pennsylvania and one in West Virginia.

The pipeline points further south. The firm is tracking $74.8 billion across 115 planned projects with expected start dates in the next six months. Nearly 80% of that planned spending sits in the South, against 11.9% in the Midwest and 7.2% in the Northeast.

Power work is moving with it. Power infrastructure starts grew at an average annual rate of 52.2% between 2021 and 2025, and year-to-date 2026 starts are up 167.4% on the same period last year. ConstructConnect expects that growth rate to ease because the comparison will soon include an unusually strong final quarter of 2025.

What It Means for Subcontractors

• Treat the median as a direction, not a bid benchmark. ConstructConnect’s figure comes from a limited sample, so project-level estimating still governs pricing on any fixed-price package.
• Expect competition for labor, equipment and materials in the South. Nearly 80% of the planned $74.8 billion sits there, and Construction Today notes that concentrated demand tends to raise competition for each of those inputs.
• Watch conversion of the pipeline. Planned projects are still in preconstruction and none is guaranteed to break ground. If owners push back on cost per square foot, more of the pipeline could slip into 2027.
• Power and electrical scopes are growing alongside the buildings. Year-to-date power infrastructure starts are up 167.4%, a second stream of work behind data center demand.