Best Data Center Build Out Cost: Top 5 Key Factors

by | May 21, 2024

Data Center Build Out Cost: Top 5 Key Factors in 2024

 

Introduction

When it comes to building a data center, understanding the data center build out cost is crucial for any business. Whether you are in healthcare, finance, or other sectors that rely heavily on robust communication systems, knowing these costs helps in planning and avoiding unexpected expenses.

Quick Overview:

  • Power Density: High-density space requires more cooling, increasing costs.
  • Redundancy/Resiliency: Higher redundancy levels mean higher costs.
  • Scale: Larger data centers can procure components more cost-effectively.
  • Timing: Rapid build-outs can be pricier than speculative developments.
  • Tier Certification: Higher certification levels, like Tier IV, can cost significantly more than lower tiers.

Data centers are essential for organizations to store, manage, and process their data efficiently. They form the backbone of modern IT infrastructure, holding everything from sensitive patient records in healthcare to massive financial databases. However, building and maintaining a data center involves numerous cost factors that need careful consideration.

We will explore the main components that influence data center build-out costs, including factors like location, infrastructure requirements, and certification levels. We will also provide a detailed breakdown of costs per square foot and per megawatt, helping you understand what to expect when planning your data center.

Cost Factors in Data Center Build-Out - data center build out cost infographic infographic-line-5-steps

Understanding Data Center Build Out Costs

Building a data center is a complex and expensive endeavor. Several factors influence the overall data center build out cost, and understanding these can help you make informed decisions. Let’s dive into the key cost drivers:

Factors Influencing Data Center Costs

Location: The cost of land varies greatly depending on the region. For instance, land in a tech hub like Silicon Valley is much pricier than in rural areas. Additionally, local regulations, taxes, and availability of skilled labor can impact costs.

Infrastructure: The infrastructure required includes electrical systems, HVAC systems, and security measures. This infrastructure ensures the data center operates efficiently and securely.

Core and Shell: This refers to the basic structure of the building, including the exterior walls, roof, and foundation. Costs can vary based on the materials used and the complexity of the design.

Enterprise Requirements: Different businesses have different needs. Some might require high levels of redundancy and security, which can significantly increase costs.

Breakdown of Costs Per Square Foot and Per Megawatt

Data center costs can be broken down into several categories:

Land: The cost of land typically ranges from $25 to $75 per gross square foot. This can be a small or significant portion of the total cost, depending on the location.

Building Shell: Constructing the building shell, which includes the exterior structure, ranges from $80 to $160 per gross square foot.

Electrical Systems: These are the most expensive components, costing between $280 to $460 per gross square foot. Electrical systems include power distribution units (PDUs), uninterruptible power supplies (UPS), and backup generators.

HVAC Systems: Heating, ventilation, and air conditioning systems are crucial for maintaining the right temperature and humidity levels. These systems cost between $125 to $215 per gross square foot.

Building Fit-Out: This involves making the space ready for use, including installing racks, security systems, and fire suppression systems. The cost ranges from $100 to $200 per gross square foot.

Powered Shell and Data Center Improvements

Powered Shell: This is the basic structure with the necessary power infrastructure. The costs for a powered shell range from $105 to $235 per gross square foot. This includes land and building shell costs.

Data Center Improvements: These bring the powered shell up to a fully operational state. Improvements include electrical systems, HVAC, fire suppression, and building fit-out. These costs range from $520 to $900 per gross square foot.

Total Development Costs

Combining the powered shell and data center improvements, the total development costs range from $625 to $1,135 per gross square foot. Alternatively, if measured based on net rentable square feet (NRSF), costs can range from $1,250 to $2,200 per NRSF.

Per Megawatt Costs: For a greenfield data center, the cost per megawatt typically ranges from $7 million to $12 million. This can vary based on the sophistication of the data center fit-out, especially for hyperscalers like cloud service providers.

Understanding these cost factors can help you budget effectively and avoid unexpected expenses. Next, we’ll delve into the key components of data center construction, including land, building shell, electrical systems, and HVAC systems.

Key Components of Data Center Construction

Building a data center involves several critical components that contribute to the overall cost. These components include the land and building shell, electrical systems, HVAC systems, and building fit-out. Let’s break down each of these elements and understand their roles and costs.

Electrical and Power Infrastructure

Uninterruptible Power Supply (UPS):
A UPS ensures that your data center remains operational during power outages by providing immediate backup power. The cost for UPS systems can be significant, especially for high-capacity units. For example, a 100kW UPS may be required for larger data centers, which can be costly but essential for reliability.

Power Distribution Units (PDU):
PDUs distribute electrical power to various IT equipment within the data center. Properly designed PDUs are crucial for ensuring a stable power supply. The cost of PDUs varies depending on their capacity and features.

Switchgear and Transformers:
Switchgear controls the flow of electricity and protects the electrical circuits, while transformers adjust voltage levels to meet the data center’s requirements. These components are critical for maintaining a stable power supply and can have a useful life of up to 30 years. High-quality switchgear and transformers are essential for preventing electrical failures and ensuring efficiency.

Cooling and Mechanical Systems

Computer Room Air Conditioner (CRAC) and Computer Room Air Handler (CRAH):
CRAC and CRAH units are vital for maintaining the temperature and humidity levels in the data center. These systems cool the air and distribute it evenly across the facility. The choice between CRAC and CRAH depends on specific cooling needs and efficiency goals.

Chillers and Chilled Water Storage:
Chillers are used to remove heat from the data center, while chilled water storage systems store the cooled water for use in HVAC systems. These systems are essential for high-density data centers where heat generation is significant. Investing in efficient chillers and chilled water storage can lead to long-term cost savings.

Land and Building Shell

The land and building shell form the foundation of any data center. This includes acquiring the land and constructing the building that will house all the equipment. Typically, the land and building shell account for 15% to 20% of the total construction cost. Factors such as location, land availability, and building design can significantly impact these costs.

Building Fit-Out

Building fit-out involves the interior construction and setup of the data center. This includes installing raised floors, lobby areas, meet-me rooms (MMR), and shipping and receiving areas. The fit-out process ensures that the facility is ready to support IT infrastructure and operational needs. Building fit-out generally accounts for 20% to 25% of the total construction cost.

Summary Table of Key Components and Costs

Component Cost Range Percentage of Total Cost
Land and Building Shell $105M – $154M 15% – 20%
Electrical Systems $280M – $346.5M 40% – 45%
HVAC / Mechanical / Cooling Systems $105M – $154M 15% – 20%
Building Fit-Out $140M – $192.5M 20% – 25%

Understanding these components and their costs is crucial for planning a data center build-out. Each element plays a vital role in ensuring the facility’s efficiency, reliability, and scalability.

Next, we will explore how different tier certification levels impact data center build-out costs.

Tier Certification and Its Impact on Costs

Cost Variations Between Tier Levels

When planning a data center, understanding the tier certification levels and their associated costs is crucial. These tiers, defined by the Uptime Institute, range from Tier I to Tier IV, each with distinct requirements for redundancy, resiliency, and security. Let’s break down how these tiers impact the data center build-out cost.

Tier I: Basic Infrastructure

Tier I data centers offer basic infrastructure with limited redundancy. They are suitable for small businesses with minimal uptime requirements.

  • Redundancy: Minimal (N)
  • Resiliency: Low
  • Security: Basic

Cost Impact: Tier I data centers are the least expensive to build, but they offer little protection against downtime.

Tier II: Redundant Components

Tier II facilities include some redundant components, providing better reliability than Tier I.

  • Redundancy: Partial (N+1)
  • Resiliency: Moderate
  • Security: Improved

Cost Impact: Building a Tier II data center can cost nearly double that of a Tier I facility. This tier balances cost and reliability, making it suitable for businesses that need more uptime but can tolerate some downtime.

Tier III: Concurrent Maintainability

Tier III data centers are designed for concurrent maintainability, meaning they can undergo maintenance without downtime.

  • Redundancy: High (N+1)
  • Resiliency: High
  • Security: High

Cost Impact: Constructing a Tier III data center is significantly more expensive than Tier I and Tier II. The costs can be $7-9 million per megawatt of installed capacity. However, the investment ensures high uptime and reliability, suitable for most enterprises.

Tier IV: Fault Tolerance

Tier IV data centers offer the highest level of redundancy and fault tolerance. They are designed for organizations that cannot afford any downtime, like financial institutions and healthcare providers.

  • Redundancy: Maximum (2N+1)
  • Resiliency: Very High
  • Security: Maximum

Cost Impact: The cost of building a Tier IV data center can be 25% to 40% more than a Tier III facility and double that of a Tier II. This tier ensures the highest level of uptime and security, but at a premium price.

Impact of Redundancy and Resiliency

As the level of redundancy and resiliency increases, so do the costs. Higher tier levels require more backup systems like uninterruptible power supplies (UPS), power distribution units (PDUs), and cooling systems. This redundancy ensures that even if one component fails, the data center continues to operate smoothly.

Security also scales with tier levels. Higher tiers demand more robust security measures, adding to the overall cost.

Understanding these variations helps in making an informed decision based on your business needs and budget. Next, we will delve into the geographic variance in data center build-out costs.

Geographic Variance in Data Center Build Out Costs

Regional Cost Differences

Building a data center is a significant investment, and the costs can vary greatly depending on the geographic location. Let’s explore the regional differences in data center build-out costs across the globe.

United States

In the United States, the cost to build a data center averages around $9.5 million per megawatt and $1,000 per square foot. However, this can fluctuate based on the region:

  • Silicon Valley: Known for its high land values, building a data center here can be more expensive. The proximity to tech giants and high demand for space drive up costs.
  • New York/New Jersey Metro Area: Similar to Silicon Valley, this region has higher land values and increased labor costs, leading to more expensive data center projects.
  • Dallas-Fort Worth and Atlanta: These areas tend to have larger wholesale data centers built in outer suburbs, making land values and build costs more economical.

Europe

Europe sees a higher average cost for data center construction, approximately $14 million per megawatt and $1,200 per square foot. Key markets include:

  • Frankfurt, Germany: A major financial hub, Frankfurt has higher construction costs due to its strategic importance and demand.
  • London, UK: Similar to Frankfurt, London’s status as a global financial center drives up data center costs.
  • Paris, France and Zurich, Switzerland: These cities also see elevated costs due to high demand and regulatory requirements.
  • Madrid, Spain and Dublin, Ireland: These locations offer more cost-effective alternatives within Europe.

Asia-Pacific

In the Asia-Pacific region, the average cost is about $12 million per megawatt and $1,000 per square foot. Notable markets include:

  • Tokyo and Osaka, Japan: High land prices and stringent building codes make these cities some of the most expensive for data center construction.
  • Seoul, South Korea and Singapore: Both are key data center hubs with high costs due to limited land and high demand.
  • Sydney, Australia: Another major market with relatively high construction costs.
  • Johor, Malaysia and Batam, Indonesia: These provide lower-cost alternatives to Singapore.

Latin America

Latin America has emerging data center markets, with notable examples including:

  • São Paulo, Brazil: As the largest market in Latin America, São Paulo has seen significant investment in data centers, though costs can be high due to infrastructure needs.
  • Querétaro (Mexico City), Mexico: For instance, Equinix’s first phase of its MX3 data center in Querétaro costs $14.5 million per megawatt but scales down to $10 million per megawatt in subsequent phases.
  • Santiago, Chile and Bogotá, Colombia: These cities are growing as data center hubs, offering more economical options compared to São Paulo.

Understanding these regional differences can help businesses make informed decisions about where to build their data centers. Next, we will address some frequently asked questions about data center build-out costs.

Frequently Asked Questions about Data Center Build Out Cost

How Much Does It Cost to Build a Data Center?

The cost to build a data center varies widely depending on several factors such as location, power density, redundancy, scale, and timing. For example, the construction cost for a Tier III data center typically ranges from $7 million to $9 million per megawatt of installed capacity. This includes costs for essential electrical and HVAC systems to power and cool the facility.

A significant factor is the tier level of the data center. Higher-tier data centers, like Tier IV, require more redundancy and resiliency, leading to higher costs. For instance, building a Tier IV data center can be 25% to 40% more expensive than a Tier III facility.

Is It Profitable to Build a Data Center?

Building a data center can be profitable, but it requires substantial upfront investment and ongoing operational costs. The profitability largely depends on factors like location, scale, and customer demand.

Economies of scale play a crucial role. Large-scale developments can leverage bulk purchasing power, reducing unit costs for electrical systems and HVAC components. For example, companies like Facebook and Google have invested billions in their data centers, benefiting from reduced costs per megawatt due to their scale.

Brownfield developments can also offer cost advantages. QTS Realty Trust, for instance, has noted a 10% to 15% cost advantage by repurposing existing buildings, translating into savings of several million dollars per megawatt.

What Is the Cost of a Tier 4 Data Center?

Tier IV data centers are the most resilient and secure, requiring the highest level of redundancy. This makes them the most expensive to build. The cost of constructing and fitting out a Tier IV data center can be double that of a Tier II facility and 25% to 40% more than a Tier III data center.

For example, if a Tier III data center costs $7 million to $9 million per megawatt, a Tier IV data center could range from $9 million to $12.6 million per megawatt. This includes the cost of duplicating critical components such as backup generators, uninterruptible power supplies (UPS), power distribution units (PDUs), and advanced cooling systems.

Understanding these costs can help businesses plan their data center investments more effectively. Next, let’s explore how different regions impact data center build-out costs.

Conclusion: Data Center Build Out Cost

Future Trends

As we look ahead, the demand for data centers is set to keep growing. The rise of technologies like AI, IoT, and 5G means more data will be generated, stored, and processed. This will push the limits of current data center capacities and drive innovation in the industry.

One major trend is the focus on sustainability. Data centers are notorious for their high energy consumption. Future designs will likely incorporate more energy-efficient technologies and renewable energy sources to reduce their carbon footprint.

Efficiency Improvements

Efficiency will be a key focus to manage the rising costs of building and running data centers. Here are some strategies:

  • Automation: Using AI and machine learning to optimize performance and reduce human error.
  • Energy Efficiency: Implementing advanced cooling systems and energy-efficient hardware.
  • Cloud Migration: Moving some workloads to the cloud can reduce the need for physical infrastructure.

AccuTech Communications

At AccuTech Communications, we understand the complexities and costs involved in building a data center. Our team of experts can guide you through every step of the process, from planning and design to implementation and maintenance.

We offer a range of services to help you build a cost-effective and efficient data center. Whether you’re looking to build a new facility or upgrade an existing one, we can provide the solutions you need.

For more information on how we can assist with your data center build-out, visit our Data Center Build Outs page.

Ensuring your data center is future-proof and efficient doesn’t have to be a daunting task. With the right strategies and expert guidance, you can build a facility that meets your needs and stays within your budget. Contact us today to get started.

 

Cost Analysis: What to Expect When Building a Data Center

Recent Posts