Texas has become a leading hub for data center development, with a project pipeline exceeding $50 billion. Annual investment in the state is projected to reach $66.2 billion in 2026. A notable example is the 1 GW complex from Meta and BlackRock, which carries an estimated cost of $14 billion and is scheduled for completion in 2028.
Construction costs for data centers have doubled compared to previous years, with a typical project now costing about $1 billion. Developers are paying twice as much for facilities that have not significantly increased in physical size. Basic shell and core construction currently ranges between $190 and $340 per square foot, or roughly $11.3 million per megawatt of capacity.
Rising expenses are driven by labor shortages and increased material prices. Specifically, the cost of copper wire has risen 17.9% year-over-year, while broader construction input costs in the US are growing by 9% annually.
Governor Greg Abbott has initiated a pause on new grid connections for data centers pending an audit of the ERCOT queue. BloombergNEF estimates this could delay 49.8 gigawatts of capacity, representing nearly 20% of the US pipeline. This disruption puts up to $15 billion in project costs and revenue at risk, forcing investors to reconsider timelines and budgets.
