Data center construction costs and Opportunity Zone budgeting

About $8.9 million to $23.3 million per MW all-in for a greenfield U.S. or Canadian project, excluding chips and GPUs, according to Cushman & Wakefield's 2026 Data Center Development Cost Guide. That range rose an average of 21% per MW since the previous edition, which covered Q4 2024.^1,2

JLL tracks shell-and-core cost (the building and its core infrastructure, usually the landlord's scope). Its average global figure was $7.7 million per MW in 2020 and $10.7 million in 2025, a 7% compound annual rate, and JLL forecasts $11.3 million per MW in 2026.^3,4 Tenant fit-out is a separate pool: JLL-derived coverage reports AI fit-out can cost up to about $25 million per MW, often more than the shell and core.⁵

Power infrastructure is the largest single component. Cushman & Wakefield's breakdown of greenfield cost shows power infrastructure at 21%, core-and-shell and sitework at 17%, contingencies at 16% and site acquisition at about 7%.¹ The rest covers mechanical and cooling systems, other electrical work and soft costs.

A 16% contingency is a signal. Equipment lead times for transformers, switchgear and generators, and the 21% cost increase in one edition, mean budgets move. For an Opportunity Zone (OZ) project, a budget that moves also moves the working capital schedule, which must stay consistent with what is actually spent.

Below is an illustrative budget for a 40 MW building at $12 million per MW, within the Cushman & Wakefield range, applying its reported component shares. It is not a quote and real budgets vary widely by market, design and density.

Two OZ consequences follow. First, almost everything except land is depreciable tangible property that the QOZB buys new, which suits the original use test. Second, the timing of each line becomes the schedule in the written working capital plan. For how the money is raised, see the capital stack for an Opportunity Zone data center.

The budget is the plan. Under the regulations, a Qualified Opportunity Zone Business (QOZB) may treat cash as reasonable working capital for up to 31 months if it is designated in writing for acquiring, constructing or substantially improving tangible property in the zone, follows a written schedule consistent with ordinary start-up spending, and is spent substantially as planned.¹⁰ Overlapping or sequential plans can extend the period to 62 months from the first infusion.¹⁰

• Write the plan from the construction budget and schedule, line by line.
• Update the schedule as contracts are signed, with a record of why dates moved.
• Keep contingency inside the plan and draw it against identified scope.
• Do not park excess cash beyond what the schedule supports; the QOZB must keep nonqualified financial property under 5% of its property, and cash outside the safe harbor counts against that limit.¹³

See the working capital safe harbor for documentation details and the development timeline for how the plan lines up with power delivery.

More than the building's own basis within 30 months, or more than half of it in a wholly rural zone. A purchased building that is not original use must be substantially improved: additions to its basis during any 30-month period after acquisition must exceed its adjusted basis at the start of that period.⁶ For property in a zone made up entirely of rural area, the threshold is 50%, effective since July 4, 2025.⁷

Land is excluded. Rev. Rul. 2018-29 holds that land under a building does not need to be separately improved and that only basis allocated to the building counts toward the hurdle.⁸ The regulations add an anti-abuse rule for unimproved land bought with no intent to improve it by more than an insubstantial amount.⁹

Data center conversions usually clear this easily. A fit-out for power, cooling and structure on a mid-sized warehouse can cost many times the building basis. The purchase price allocation still matters and must be defensible. See converting industrial buildings into data centers and the substantial improvement test.

Phase the build so each phase has its own budget, schedule and cash infusion. Large campuses are usually delivered in buildings or data halls as power arrives. Each phase can be matched to its own working capital plan, as long as the plans together stay within 62 months of the first infusion and each infusion is significant.¹⁰

Escalation should be priced in, not hoped away. Cushman & Wakefield's 21% average increase between two editions of its guide shows how fast costs can move.¹ A budget with realistic escalation and a funded contingency is easier to defend as a schedule consistent with ordinary start-up spending than one that is rewritten every quarter. When the scope genuinely changes, document the reason at the time it happens.

Usually the tenant, but the choice has tax consequences on both sides. If the QOZB owns the servers and racks, they count in both the numerator and denominator of its 70% tangible property test, and short-lived equipment must be replaced with new qualifying property over a 10-year hold.¹³ If the tenant owns them, they are outside the QOZB's tests entirely.

Ownership also shapes depreciation. Public Law 119-21 made 100% bonus depreciation permanent for qualified property acquired after January 19, 2025, including MACRS property with a recovery period of 20 years or less; the building shell does not qualify.¹¹ A cost segregation study separates the shell from shorter-lived electrical and mechanical components so the QOZB can claim bonus depreciation on the latter.¹² See depreciation, bonus depreciation and Opportunity Zones and servers, equipment and the OZ rules.