Construction Costs Surge for Data Center Builds
Labor & Scale are Budgetary Challenges
Of particular interest to the many Eastern Pennsylvania enterprises whose foresight led them to prepare for the digital revolution by building a data center, construction costs in Eastern Pennsylvania continue to rise. This is particularly true for those considering a data center build to replace an aging facility, as a net 62% of construction companies in the Commonwealth see higher costs in 2026 on data center builds.
Construction labor cost increases are already outpacing other private sector labor, as detailed in this ConstructConnect video. Rebuilding or replacing a data center has always been a costly proposition, and labor is increasing data center construction budgets even further. And that’s not the only difficulty in building a private data center.
Is Scale Tipping Against You? The economics of data center construction also put the enterprise at a disadvantage vs hyperscale AI builds. The first megawatt of any data center build is the most expensive, and each additional megawatt of power capacity gets cheaper from there on. This is true of both traditional and AI data centers. And there’s still a place for traditional data center infrastructure, which is likely the best home for your stable, predictable workloads that have performed well and economically in your existing data center.
The best solution is to have a data center home that handles your current core applications as well as one that has experience with the higher power densities that accompany HPC and AI workloads. That’s a tough data center to build economically at small scale.
Is Hybrid Colocation Your Solution? If a new data center is in your future but the capital for one that meets your needs is not, a hybrid colocation solution that blends cloud options with a fiber-rich, highly available data center is a solution you should consider. Direct LTx has served the Philadelphia market and all of Eastern Pennsylvania for two decades in our resilient, cloud-adjacent data center and has ample experience with higher densities that meet today’s needs.
Replacing Your Aging Data Center: Reviewing the Options and Strategies Available to You is a new white paper on data center options for whose legacy facilities are past their prime. Read it at here, or for multiple hard copies for your team email us at strategy@DirectLTx.com