development timelines
on this page
overview
in data center development, time is the most valuable resource. a 12-month delay can compress project irr by 200-300 basis points. developers pay premiums for sites with existing power capacity specifically to avoid interconnection delays.
development timeline comparison
| phase | greenfield | brownfield |
|---|---|---|
| site acquisition | 3-6 months | 6-12 months |
| interconnection | 18-36 months | 48-72+ months |
| permitting | 6-12 months | 12-24 months |
| construction | 12-18 months | 18-24 months |
| total | 3-5 years | 5-8+ years |
key bottleneck: interconnection queue (3-7+ years) exceeds construction time.
hyperscaler capital expenditure (2024-2025)
| company | 2024 capex | 2025 capex | growth |
|---|---|---|---|
| microsoft | $50-65b | ~$80b | +45% |
| $49-52b | $91-93b | +80% | |
| amazon | ~$75b | $118-125b | +60% |
| meta | ~$60b | $70-72b | +17% |
aggregate 2025: $315-392b (top 11 hyperscalers)
this capital seeks deployment—delays mean lost opportunity.
ai infrastructure demand growth
- ai data center market: $236b (2025) to $934b (2030) = 31.6% cagr
- global dc ai capacity: 33% (2025) to 70% (2030)
- 10gw breaking ground in 2025; 7gw targeted for completion
development returns
| metric | value |
|---|---|
| digital realty yield on cost | 11-14% |
| equinix wholesale returns | ~30% (historical) |
| developer hurdle rate | 12-19% irr |
| development profit margin | 40-50%+ |
| cap rates (2025) | mid-4% to mid-6% |
the cost of delay
operational downtime costs
- per-minute: $5,600 average (gartner)
- per-hour: $140,000-$540,000
- 90-minute outage: >$505,500 in lost revenue
construction delay costs
for a 100mw facility @ $175/kw-month lease rate:
- monthly revenue at stabilization: $17.5m
- 12-month delay = $210m in foregone revenue
- plus financing costs on drawn capital
interconnection delay costs
- pjm transmission costs (2024): $4.3b passed to ratepayers
- virginia portion: $1.98b
- capacity auction inflation: $2.2b to $14.7b (single year)
the time premium calculation
sites with existing transmission capacity command premiums because:
- 3-year interconnection queue effectively capitalizes into land price
- paying 5x farmland value ($50k vs $10k/acre) is rational if it secures 2-year speed advantage
- on 100mw campus: 2-year acceleration = $400m+ in earlier revenue
speed strategies
behind-the-meter generation
- bypass queue entirely
- 2-3 year timeline vs 5-7+ years
- 54.5% of gigawatt projects use this approach
modular/prefabricated construction
- 50% construction time reduction
- up to 50% irr improvement
- roi timeline shortened by ~1 year
xai colossus example
- repurposed electrolux factory
- completed in 122 days
- 150mw power supply approved nov 2024
- xai paid for new substation construction
financial model impact
base case (100mw)
- total capex: $1.15b ($11.5m/mw)
- build period: 24 months
- stabilized annual noi: ~$270m
- yield on cost: ~23.4%
- levered irr: 35.5%
12-month delay scenario
- additional financing cost: ~$50m
- foregone revenue: ~$210m
- irr compression: 200-300 bps
sources
- gartner downtime cost analysis
- morgan stanley hyperscaler research
- digital realty & equinix investor presentations
- cbre data center trends reports
- mordor intelligence market sizing