Real estate services firm JLL, in its Global Construction Costs Index 2026, reports that annual construction cost escalation of 3% to 6% is now the baseline for the industry, up from the 2% to 3% range common before 2020, with a further 3.2% to 4.2% increase forecast for North America in 2027. Matthew Giddings, executive director of technical services with JLL's Data Centers and Critical Environments team, said the economics break down specifically when costs outpace contracted revenue or power delays postpone income while financing costs continue to accumulate. Speculative campuses without anchor tenants, projects with uncertain power delivery, and older facilities being repositioned for AI workloads face the greatest risk. Giddings recommended phased construction aligned with confirmed electricity supply, early engagement of trade partners, and flexible procurement strategies that reserve manufacturing slots without freezing design specifications.
The combination of sustained construction cost inflation and constrained skilled labor availability, particularly among electricians, high-voltage specialists, and commissioning teams, creates conditions where only well-capitalized projects with secured power and committed tenants can reliably reach delivery. As AI drives a wave of speculative campus development, the JLL analysis identifies a structural vulnerability that could lead to project cancellations or financial distress at sites that lack those fundamentals.
Construction cost inflation as a market pressure on data center development is a timely economic story with broad industry relevance, not covered in the already-published list.