Data center construction projects face record-breaking inflation amid delays to materials deliveries and competition for skilled labor, according to research from global professional services company Turner & Townsend.
Average costs on data center projects rose 15% in 2022 compared to last year, with escalating prices for energy and key materials squeezing margins. Intense competition for labor from life sciences, gigafactories, and other large-scale advanced manufacturing facilities in North America is driving up labor costs. Some 92% of respondents reported that they are struggling to meet construction demand due to a shortfall of experienced site teams.
Supply chain woes resulting in extended equipment and material lead times are jeopardizing program completion dates, with delays of more than 12 weeks for some components. Of the 45 key markets covered in the survey, North America has five of the top ten most expensive world markets. This is prompting clients to re-evaluate their development strategies to consider building in less costly new or emerging regional markets such as Columbus and Canada.
Despite these challenges, optimism remains high in the sector with 71% of respondents seeing the sector as less susceptible to recessionary pressures than other industries.
Related Stories
Giants 400 | Aug 30, 2021
2021 Giants 400 Report: Ranking the largest architecture, engineering, and construction firms in the U.S.
The 2021 Giants 400 Report includes more than 130 rankings across 25 building sectors and specialty categories.
Giants 400 | Aug 26, 2021
2021 Data Center Giants: Top architecture, engineering, and construction firms in the U.S. data center facilities sector
Corgan, Holder Construction, Jacobs, and Whiting-Turner top BD+C's rankings of the nation's largest data center facilities sector architecture, engineering, and construction firms, as reported in the 2021 Giants 400 Report.
Contractors | Jul 23, 2021
The aggressive growth of Salas O'Brien, with CEO Darin Anderson
Engineering firm Salas O'Brien has made multiple acquisitions over the past two years to achieve its Be Local Everywhere business model. In this exclusive interview for HorizonTV, BD+C's John Caulfield sits down with the firm's Chairman and CEO, Darin Anderson, to discuss its business model.
Data Centers | Mar 20, 2021
Japan’s NTT pushes U.S. data center expansion
Two new facilities opened last month, with several others under construction.
Data Centers | Mar 16, 2021
Greener data centers can also be more profitable
A new white paper explores revenue-enhancing ways for data centers to reduce their greenhouse gas emissions.
Data Centers | Feb 18, 2021
Arcari Cimini Architettura designs Data Center Floating Island
The concept looks to create an entire floating city centered around a data center.
Data Centers | Jan 21, 2021
The Weekly show, Jan 21, 2021: Data centers in a pandemic world, and LGBT certification for AEC firms
This week on The Weekly show, BD+C editors speak with AEC industry leaders about LGBT certification for architecture, engineering, and construction firms, and the current state of data centers in a pandemic world.
Giants 400 | Dec 16, 2020
Download a PDF of all 2020 Giants 400 Rankings
This 70-page PDF features AEC firm rankings across 51 building sectors, disciplines, and specialty services.
Data Centers | Dec 9, 2020
COVID-19 pandemic elevates data centers to key priority market for investors
But supply-chain and labor problems could slow deliveries, according to Turner & Townsend’s 2020 report that looks at 40 markets.
Giants 400 | Dec 3, 2020
2020 Data Center Giants: Top architecture, engineering, and construction firms in the U.S. data center facilities sector
Corgan, Jacobs, and Whiting-Turner Contracting Company top BD+C's rankings of the nation's largest data center facilities sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
