Europe data center costs rise; 19% call contractor capacity manageable

Data center construction costs in Europe continued to rise in 2026, and Zurich and the Nordic capitals are among the world's most expensive locations for data center construction, according to Turner & Townsend's Data Centre Construction Index.

Only 19% of respondents considered contractor capacity manageable, compared with 52% globally. A skills crisis is the main driver: AI demand is driving larger, more technically complex projects that require more technical and project management experience to deliver.

For allocators comparing European data center funds, the 19% capacity reading is a concrete underwriting input for delivery schedules and cost assumptions. A manager whose schedule assumes the global view of contractor capacity is relying on an outlook that only 19% of European respondents share; that gap may show up in delivery dates and cost overruns before it shows up in yields. Higher build costs and scarce contractor capacity are likely to lower development yields unless rents or lease terms rise to offset them.

Niall O'Reilly, director and data center lead for Europe at Turner & Townsend, said many attractive locations, such as Scandinavia, benefit from affordable renewable power and cooler climates suited to higher-density designs. Demand is exceeding contractor capacity and pushing up construction costs in Copenhagen, Oslo, Stockholm, Helsinki and other markets, he said. Turner & Townsend is also seeing more data center activity in Eastern European countries including Hungary, Bulgaria and Slovenia, and in warmer climates such as Greece.

The European Union is seeking to unlock more than €30 billion ($33.55 billion) in public-private co-financing for AI gigafactories, according to IREI. That is capital for AI projects; the 19% reading is about the contractors available to build them.