A common claim in transatlantic cost content is that European data centers cost 20 to 40 percent more per megawatt to build than US ones. An earlier version of this article made that claim, along with detailed per-MW and per-square-meter tables for ten markets. We could not trace those figures to any published source, so they have been removed.
The best public benchmark tells a different story. Turner & Townsend's Data Centre Construction Cost Index 2025-2026, released November 5, 2025, puts London and Frankfurt below the most expensive US markets on a cost-per-watt basis. Europe's real cost problem is not the build price. It is time: how long it takes to get a grid connection, a permit, and a design that meets European efficiency rules.
This article sets out what the sourced numbers say, where the real differences lie, and how a US estimator should think about pricing European work.
The Headline Comparison: Cost Per Watt
Cost per watt (or per megawatt) of IT load is the most useful unit for comparing data centers across markets, because floor area varies widely with rack density. Turner & Townsend's index reports cost in US dollars per watt for a typical air-cooled, build-to-suit hyperscale data center, across 52 markets.
| Market | Cost per watt (US$), 2025-26 index | Equivalent per MW |
|---|---|---|
| Tokyo | 15.2 | $15.2 million |
| Zurich | 14.2 | $14.2 million |
| Silicon Valley | 13.3 | $13.3 million |
| New Jersey | 12.9 | $12.9 million |
| Oslo | 12.4 | $12.4 million |
| Stockholm | 12.3 | $12.3 million |
| Helsinki | 12.3 | $12.3 million |
| London | 12.0 | $12.0 million |
| Frankfurt | 11.6 | $11.6 million |
| Milan | 9.79 | $9.79 million |
Sources: Turner & Townsend press release, November 5, 2025; Milan figure from Il Sole 24 Ore, March 16, 2026, citing the same Turner & Townsend data.
Three readings follow from that table.
First, the two biggest European markets with published figures, London and Frankfurt, build for less per watt than Silicon Valley and New Jersey. The "Europe costs 20 to 40 percent more" claim does not hold against the costliest US markets.
Second, the US is not one market. Statista's summary of the same index names Phoenix, Atlanta, and Dallas as the cheapest US markets. Against those, London and Frankfurt likely do carry a premium, but the index figures we could access do not give the cheap US markets' values, so we will not put a percentage on it.
Third, the most expensive European markets in the index are outside FLAP-D: Zurich and the Nordic capitals. Milan, at $9.79 per watt, is 11 percent below the European average according to Il Sole 24 Ore.
Global and US Benchmarks
Two other sourced figures help anchor the comparison.
JLL's 2026 Global Data Center Outlook (January 5, 2026) says the average global data center construction cost rose from $7.7 million per MW in 2020 to $10.7 million per MW in 2025, and forecasts $11.3 million per MW for 2026 on a shell-and-core basis. JLL adds that the tenant's tech fit-out can cost as much as $25 million per MW for AI infrastructure. That fit-out sits on top of the build cost in any market.
In the US, Gordian's RSMeans data, as reported by Building Design+Construction on April 24, 2026, puts a one-story data center building at a $505 per square foot national average in Q1 2026, ranging from $398 in Austin to $688 in Palo Alto. Our data center construction cost per square foot and per MW guide explains how per-square-foot and per-MW figures relate.
Turner & Townsend's index also found that AI data centers in the US carry a 7 to 10 percent construction cost premium over traditional data centers of similar IT capacity, and that traditional data center cost inflation averaged 5.5 percent worldwide in 2025.
Where Europe Really Costs More: Time
If build cost per watt is roughly comparable, where does the European penalty show up? Mostly in schedule, which turns into carry cost.
Grid Connections
JLL says the average wait for a grid connection in primary data center markets now exceeds four years. That applies on both sides of the Atlantic. Northern Virginia, the largest US market, is power-constrained too, with vacancy at 0.2 percent in CBRE's H1 2026 report.
In Europe, CBRE's Q1 2026 research, as reported by W.Media on July 17, 2026, gives specific dates:
- Frankfurt: grid capacity in the central area is constrained, with upgrades unlikely until the 2030s.
- London: a substation upgrade serving the West London corridor is unlikely until the early 2030s.
- Amsterdam: a moratorium on new data center projects larger than 70 MW.
- Paris: lengthy environmental and approval processes.
In Great Britain, the national connection queue had grown to over 700 GW before reform. The reformed queue NESO published on December 8, 2025 sits at 381.5 GW, including 99 GW of transmission-connected demand, according to the law firm Walker Morris. Our UK data center construction analysis covers that in detail, and the Dublin data center power moratorium breakdown covers Ireland.
Every month a building waits for power is a month of financing and general conditions with no revenue. That cost does not appear in a per-watt construction index, but it is real money on a European pro forma.
Market Tightness
CBRE's Q1 2026 figures put FLAP-D vacancy at 7.3 percent, with net absorption up 90 percent year on year to 572.1 MW. Frankfurt was tightest at 5 percent vacancy. That is far looser than Northern Virginia's 0.2 percent, which suggests Europe's limit is not demand outrunning supply as much as power and permits slowing both.
Regulatory Content Built Into the Building
European data centers carry design requirements that US facilities usually do not. Two are worth knowing in detail.
Germany's Energy Efficiency Act
Section 11 of Germany's Energieeffizienzgesetz (EnEfG) sets efficiency rules for data centers. Facilities that start operating on or after July 1, 2026 must reach a power usage effectiveness (PUE) of 1.2 or lower. They must also plan for a minimum share of reused energy: at least 10 percent from July 1, 2026, 15 percent from July 1, 2027, and 20 percent from July 1, 2028. Both must be met as a sustained annual average within two years of commissioning. Existing data centers that started operating before July 1, 2026 must reach PUE 1.5 from July 1, 2027 and 1.3 from July 1, 2030.
Meeting PUE 1.2 pushes mechanical design toward free cooling, higher supply temperatures, or liquid cooling. The reused-energy rule means there has to be a real way to deliver waste heat to an offtaker, such as a district heating network. Neither of those is standard on a US design.
EU Reporting Rules
Commission Delegated Regulation (EU) 2024/1364, adopted under Directive (EU) 2023/1791, requires operators of data centers with installed IT power demand of at least 500 kW to report data including total energy use, IT energy use, and other performance indicators. The first deadline was September 15, 2024, then May 15, 2025, and every year after. Reporting accurately means submetering has to be designed into the electrical distribution from the start. It is cheap at design stage and expensive to retrofit.
Labor: Different Rates, Same Shortage
Hourly labor rates differ a lot between the US and Europe, and not in the direction many people assume.
Turner & Townsend's Global Construction Market Intelligence report 2026 (July 8, 2026) lists average construction wages by city. New York was $161.4 an hour, Chicago $128.7, Washington DC $80.7, and London $52.3. These are general construction averages, not data center specialist rates, but they show US union gateway cities pay far more per hour than London.
Bureau of Labor Statistics wage data for May 2025 puts the national median wage for electricians at $30.38 an hour. That is a base wage, not a fully burdened rate, so it cannot be compared directly with Turner & Townsend's figures. The point is that labor rate alone does not make Europe more expensive.
What Europe and the US share is a shortage of skilled MEP labor. Turner & Townsend's July 2026 release said 87 percent of markets report MEP trade shortages and that data centers are the most constrained sector globally for contractor capacity. Scarcity drives premiums, retention costs, and crew mobilization on both continents. Our guide to data center trades in demand covers the US side.
How to Price European Work
If you are a US contractor or estimator looking at a European data center bid, here is a sourced checklist.
- Start from a per-watt benchmark for the specific city, such as Turner & Townsend's $12.0 per watt for London or $11.6 for Frankfurt. Do not start from a US per-square-foot number and add a premium.
- Price AI fit-out separately. JLL says it can reach $25 million per MW on top of shell and core.
- Get the grid connection date in writing and build the schedule around it. CBRE's research points to the 2030s for some substations in Frankfurt and West London.
- Carry regulatory design content as named line items: PUE and waste-heat infrastructure in Germany, submetering for EU reporting everywhere.
- Do not assume US margin norms transfer. Local main contractor practices, design liability, and payment terms differ by country. Check them with local partners before you bid.
Converting units is a common source of error. A square meter is 10.764 square feet, so a cost per square meter in euros has to be multiplied by the exchange rate and then divided by 10.764 to get dollars per square foot. Skipping the area division overstates European costs roughly tenfold.
Run your scenarios through the cost estimator with grid connection and regulatory content as separate lines. For broader construction pricing outside data centers, see US vs UK vs Germany construction costs.
Frequently Asked Questions
How much does it cost to build a data center in Europe per MW?
Turner & Townsend's 2025-26 index puts London at US$12.0 per watt (about $12.0 million per MW) and Frankfurt at US$11.6 per watt for a typical air-cooled hyperscale facility. Il Sole 24 Ore reports Milan at $9.79 per watt using the same data. These exclude tenant AI fit-out, which JLL says can reach $25 million per MW.
Are European data centers more expensive to build than US ones?
Not against the most expensive US markets. In Turner & Townsend's index, London and Frankfurt cost less per watt than Silicon Valley ($13.3) and New Jersey ($12.9). The cheapest US markets, which Statista names as Phoenix, Atlanta, and Dallas, are likely below the European core markets.
Why do European data center projects take longer?
Mainly grid connections and approvals. CBRE's Q1 2026 research says Frankfurt's central-area grid upgrades and a West London substation upgrade are unlikely until the 2030s, and Amsterdam has a moratorium on new projects larger than 70 MW. JLL says average grid waits in primary markets exceed four years globally.
What efficiency rules apply to new data centers in Germany?
Under Section 11 of Germany's Energy Efficiency Act, data centers starting operation on or after July 1, 2026 must reach PUE 1.2 or lower and plan for at least 10 percent reused energy, rising to 15 percent from July 2027 and 20 percent from July 2028.
Do EU data centers have to report energy data?
Yes. Delegated Regulation (EU) 2024/1364 requires data centers with at least 500 kW of installed IT power to report energy and performance data annually, with deadlines of May 15 each year after the first in September 2024.
Is construction labor cheaper in Europe?
Average hourly construction wages are lower in London ($52.3) than in New York ($161.4) or Chicago ($128.7), per Turner & Townsend's 2026 market intelligence report. Skilled MEP labor is short on both sides of the Atlantic, which drives premiums regardless of base rates.
