What Does a Data Center Cost Per MW?

What Does a Data Center Cost Per MW — and How Is It Underwritten?

Data center economics revolve around a handful of metrics that translate physical capacity into financial returns — and underwriting the land is fundamentally an exercise in decomposing and pricing risk. (Figures below are general industry ranges and vary widely by market, design, and time.)

What Does a Data Center Cost Per MW to Build?

Short answer: Roughly $10 million to $15 million per MW of critical IT load all-in for most U.S. projects in 2026, and more for liquid-cooled AI halls. JLL puts the 2026 global average at $11.3 million per MW, and Cushman & Wakefield's August 2026 cost guide shows per-MW costs up about 21% since late 2024.

Cost per MW is the headline number because capacity is leased by the megawatt; floor area is secondary. Underwriting compares it to rent per MW and to the land basis — and land basis is set by power. The other two numbers every buyer asks for:

• How much does powered land cost per acre? In secondary markets powered land typically prices in the low-to-mid six figures per acre, while Northern Virginia powered land trades at $6 million+ per acre (versus about $4 million for entitled land without power). Power is what moves the number: ground worth about $10,000 an acre without a credible power path can reach six figures per acre once capacity and the utility relationship are secured. (more)
• How long does it take to get power to a data center site? About 4 years on average for a new large-load grid connection in 2026, versus 12–18 months before 2022. Constrained markets such as Northern Virginia run up to ~7 years for 100 MW, while sites with an existing substation or in emerging markets can be energized in 12–24 months. (more)

For a priced-by-the-market example, the Memphis powered shell has 4.5 MW contracted today; the TVA rate change behind it is covered in Tennessee & the TVA Data Center Market.

Which Metrics Drive Data Center Returns?

Short answer: Cost per MW, rent per MW, yield on cost and the development spread. Build to an 8% yield on cost, sell at a 6% cap rate, and the 200 bps spread is the development profit — about a third more value than it cost to build.

Cost per MW is the headline development metric — the all-in cost to build a megawatt of critical IT capacity, commonly in the range of roughly $10M–$15M per MW in 2026 depending on tier, density, cooling, and location. Cost per rack rises as densities climb from ~10 kW toward 100 kW+. Cost per square foot is secondary, because value tracks power, not floor area — a small, ultra-dense AI hall can be worth far more than a large, low-density one. Yield on cost is stabilized NOI divided by total development cost, and the development spread is the gap between that yield and the exit cap rate — the profit of development, capitalized into value.

Why Does Land Basis Matter So Much?

Short answer: Because powered land reprices once power is credible — from roughly $10,000 an acre to six figures in secondary markets. Controlling the dirt and the power early, before the market prices the power, is what creates the spread.

In a powered-land deal, controlling the dirt and the power early — at a low basis, before the market fully prices the power — is what creates the spread. The investor who secures shovel-ready powered land before the market reprices it is positioned to capture the upside as demand arrives. That is the land-basis thesis at the center of the whole opportunity.

What Risks Do Data Center Investors Price?

Short answer: Six: power, entitlement, utility, construction, tenant and exit. Power carries the most weight — without a dated path to megawatts, a site is a speculation on power, not a data center site.

Power risk dominates and carries the heaviest weight — a site without a credible, near-term path to power is a speculation on getting power, not a data center site. For how those power questions are assessed, see How Much Power Does a Data Center Need? and Data Center Site Selection.

Why Do Data Centers Attract So Much Capital?

Short answer: Investment-grade tenants, 10–15+ year leases and supply capped by power. That scarcity is what produces wide development spreads.

Demand (AI and cloud) is strong and growing; tenants — hyperscale cloud and AI operators — are exceptionally creditworthy; leases are long, often 10–15+ years; and supply is constrained by power. That combination produces wide development spreads and scarcity value for powered land. The very constraint that makes development hard is what makes secured power so valuable.

Frequently Asked Questions

Underwriting a data center land opportunity?

Carson Jones can help you assess the power, entitlement, and market risks behind a site. Get in touch or visit Passive Investments.

Educational information only — not legal, tax, or investment advice. Figures are general industry ranges and change frequently.

Carson Jones

Founder · Passive Investments · eXp Commercial

Carson Jones is the host of Carson's Corner: Commercial Real Estate, author of The Red Flag Playbook, a licensed commercial real estate advisor and business broker, and the founder of Passive Investments. With 18 years of experience as an entrepreneur and 12 years specializing in passive investing, Carson works with high-net-worth individuals, family offices, business owners, and sophisticated investors as a broker and principal.

Carson holds a BBA in Finance from Baylor University and his Tennessee commercial real estate license (#382989). He actively pursues acquisition and equity opportunities across the United States and abroad through a worldwide network of qualified buyers, family offices, institutional investors, and top-tier developers.