AI Data Center Construction Boom Outpaces Supply Chains

AI-Driven Data Center Construction Faces Critical Supply Chain Challenges

The construction industry is experiencing unprecedented demand for artificial intelligence data centers, yet supply chain limitations threaten to derail massive projects worldwide. According to a November 6, 2025 Turner & Townsend report, 2025 marks an inflection point as the industry shifts from traditional air-cooled facilities to advanced, liquid-cooled AI-grade data centers.

Explosive Growth Projecting Forward

Global spending on data centers is expected to reach record levels, with the UK alone projecting data center spending could rise to approximately £10 billion annually by 2029, up from roughly £1.75 billion today, according to Barbour ABI analysis. Almost 100 data center projects are currently in planning in the UK alone, driven predominantly by AI applications and Internet of Things demand.

Microsoft's $15 billion investment in UAE AI infrastructure (announced November 6, 2025) exemplifies the scale of capital flowing into AI data center construction globally. Google is constructing a large AI data center on Australia's remote Christmas Island following a major cloud computing deal announced the same day.

Construction Cost Premiums for AI-Grade Facilities

Turner & Townsend's Data Centre Construction Cost Index 2025-2026 reveals a critical market dynamic: AI-capable data centers cost 7-10% more to build than traditional facilities in the United States. Globally, traditional data center construction cost inflation averaged 5.5% in 2025, but AI-optimized facilities command significantly higher premiums.

The most expensive markets for data center construction include:

• Tokyo: $15.2 per watt
• Singapore: $14.5 per watt
• Zurich: $14.2 per watt
• Silicon Valley: $13.3 per watt
• London: $12.0 per watt
• Frankfurt: $11.6 per watt

The Real Bottleneck: Supply Chain Readiness

While construction costs concern developers, supply chain preparedness poses the greater threat to delivery timelines. Turner & Townsend's survey of industry leaders revealed:

• 83% said local supply chains are NOT well-prepared to support advanced cooling techniques required for high-density AI centers
• 48% identified power availability as the primary obstacle to on-schedule delivery

AI data centers demand dramatically different cooling technologies than traditional facilities. Liquid cooling systems—essential for high-density AI workloads—require specialized expertise, custom equipment, and supply chain coordination that most regions lack.

Power: The Critical Constraint

Power availability emerges as the critical constraint. High-density AI data centers demand significantly higher electrical capacity than traditional facilities. Long lead times for grid connection upgrades, fierce competition for limited power supply from both business and consumer demand, and regional grid constraints create bottlenecks.

AI data center construction is driving renewed interest in gas-fired power plants and even nuclear facility restarts, according to energy policy analysis. Infrastructure developers face pressure to accelerate planning and permitting processes and coordinate grid reinforcements in data center clusters to avoid connection delays.

Technical Complexity Driving Costs

AI data centers require:

• Upgraded grid connections with specialized infrastructure
• Advanced fire suppression and containment systems for liquid cooling
• Specialized installation skills for liquid cooling equipment
• Longer lead times for custom electrical and mechanical equipment
• Bespoke infrastructure designs for specific AI workloads

Regional Winners and Losers

Regions with established data center infrastructure, power capacity, and supply chain relationships are positioned to capture AI facility investments. London-based Equinix announced a £3.9 billion Hertfordshire data center campus purchase (October 30, 2025), signaling continued investment in mature markets. Simultaneously, emerging markets struggle to build the infrastructure ecosystem required for AI facility development.

What This Means for Contractors

Construction firms specializing in data center projects face immediate opportunities but must address:

• Supply chain diversification to reduce single-source risks
• Advanced cooling technology expertise development
• Power infrastructure coordination with grid operators
• Project timeline realism based on supply constraints
• Cost estimation accuracy for AI-grade facilities versus traditional builds

Turner & Townsend's Paul Barry, Data Centres Sector Lead for North America, noted: "Power availability remains a critical barrier, with long-lead times for grid connection the main constraint. Developers and operators must adapt quickly to the evolving landscape, securing reliable supply chains and exploring off-grid design solutions."

Industry Outlook

The AI data center construction boom will continue, but projects that fail to account for supply chain realities and power constraints risk significant delays and cost overruns. Successful delivery requires sophisticated project management, early supply chain engagement, and realistic risk assessment.

Sources: Turner & Townsend Data Centre Construction Cost Index 2025-2026 (November 6, 2025), New Civil Engineer (November 6, 2025), Barbour ABI UK data centre analysis (2025), Reuters (November 6, 2025), Allianz Commercial (November 6, 2025).