Texas data center boom collides with soaring construction costs

Building the physical backbone of artificial intelligence in Texas has become a very expensive hobby. According to a Bloomberg analysis, a single data center project in the state can now carry development costs in the tens of billions of dollars. The numbers behind the build-out Texas leads US data center development, with a project pipeline that has passed $50 billion. Annual investment in the state is projected to reach $66.2 billion in 2026. Consider the 1 GW data center complex announced by Meta and BlackRock in Texas. It is expected to cost about $14 billion to develop and is planned to come online in 2028. At a more granular level, shell and core construction for Texas data centers runs between $190 and $340 per square foot. That works out to about $11.3 million per megawatt of capacity. “Shell and core” means the basic structure: walls, roof, foundation and core building systems. It does not include the servers, chips and networking gear that make the building useful. Why everything costs more The Bloomberg analysis points to several pressures stacking on top of each other. Labor shortages are one. Material prices are another. Steel prices have climbed 22% year-over-year. Al...