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Rising costs will not halt data center construction boom, Citi says

Nov 11, 2026, 9:59 AM EST1 sourcesAI-analyzed
Why it may matterVerify against the original reporting

Higher construction and financing costs raise developers' project costs and could squeeze returns, but Citi expects demand for AI computing to sustain absorption of capacity; financing may re-route from HY bonds to other capital markets, altering funding mix and borrower cost profiles.

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What happened, with direct paths to the underlying reporting

Citi said data center construction costs and financing costs are rising but does not expect the AI-driven data center build boom to end, citing strong demand and rapid projected AI output growth.

  • Citi told clients that data center construction is getting more expensive.
  • Citi Research forecasts AI token production will grow at a 236% annual rate over the next five years, and generative AI workloads rising from 26% of total demand in 2026 to about 82% by 2031.
  • Citi said an increase in financing costs for new data centers is inevitable and expects fewer high-yield data center bond sales next year as risk premiums rise, though funding could shift to other capital markets.

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