15 Mistakes That Kill Data Center Projects (and How to Avoid Them)
Most data center projects don’t fail from lack of demand. They fail from operator mistakes. In this piece, we share 15 silent killers of data center deals and how disciplined builders can avoid them.
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Most new data center projects won’t fail from lack of demand.
They’ll fail from operator mistakes.
The capital is there. The hyperscaler demand is there. The sovereign funds are there.
But execution is where projects die.
Below are the 15 silent killers of data center projects and how to avoid them.
Avoid these, and you’ll be among the top 10% of operators who actually get projects built.
1. Underestimating Power Timelines
Power is the real bottleneck, not capital. One $600M campus in Europe sat idle for two years because a transmission upgrade slipped.
Smart operators model five-year delays into their plans and underwrite accordingly.
2. Ignoring Fiber and Network Proximity
A billion-dollar campus without fiber is a ghost town. In Asia, one operator launched 20MW in record time but forgot the second diverse path. Tenants refused to risk single-homed latency.
Fiber isn’t an afterthought; it’s as fundamental as power.
3. Confusing Demand Signals with Signed Deals
You can’t finance PowerPoints. A European developer hyped “exploding AI demand” with slick Powerpoint charts but zero signed tenants. Lenders walked.
In this market, thin-margin anchors matter more than thick pipelines of promises.
4. Overbuilding Without Anchors
“Build it and they will come” was gospel in the last decade. In 2025, it’s suicide. A Texas project poured $400M into empty halls only to find hyperscalers already secured cheaper sites nearby.
Phased builds tied to actual demand are the only way to survive.
5. Mispricing Political & Regulatory Risk
Land is never just land. In Latin America, a developer secured acreage and power but ignored zoning. A new mayor froze permits, killing the project mid-construction.
Politics is infrastructure. Treat it like engineering, or your project short-circuits.
6. Chasing the Wrong Market
“Underserved” doesn’t mean “strategic.” An operator gambled on a secondary African city as “first mover.” The hyperscalers never came.
Ecosystem density matters more than being early.
7. Overlooking Cooling & Water Constraints
Heat and water quietly kill projects. A Middle East site promised 50MW but ignored aquifer stress. When water rights were denied, the site became useless desert land.
Sustainable cooling isn’t optional, it’s survival.
8. Weak Financing Structures
Good projects die from bad cap stacks. One developer financed a 10MW build with floating-rate debt. By COD, interest costs doubled, wiping out equity.
Financial discipline separates survivors from casualties.
9. Treating ESG as a Box-Check
Ignoring ESG isn’t just bad optics, it’s a financing killer. A European bank pulled a nine-figure loan when an operator couldn’t prove green sourcing.
Today, capital is greener than ever. If your story isn’t, you won’t get funded.
10. Overengineering the Design
The temptation: Tier IV redundancy, cathedral ceilings, futuristic cooling. But tenants rarely pay for what they don’t need. A Midwest project overspent 30% and never broke even.
Efficiency wins over extravagance.
11. Ignoring Secondary Revenue Streams
Waste heat, onsite renewables, storage. Left on the table, they’re missed profits. Operators in Denmark now sell heat back to districts. Those who didn’t design for it? Stranded.
Margins are too thin to ignore upside.
12. Failing to Recruit Talent Early
A data center isn’t just a building, it’s a living system. One U.S. operator hired ops staff after COD. Within 3 months, outages cratered client trust.
Talent is infrastructure; secure it before you pour concrete.
13. Neglecting Customer Trust
One missed SLA can shadow you for a decade. A hyperscaler still refuses to lease from an operator after a single outage in 2019.
Trust compounds like interest for better or worse.
14. Overestimating Scalability
Not every 10MW site scales to 100MW. A project in Seoul hit a hard ceiling at 30MW because transmission caps couldn’t expand. Investors priced for 100. They lost.
Scalability isn’t a vision; it’s a constraint to model upfront.
15. Ignoring Exit Pathways
If you can’t explain how investors get out, you won’t raise the next round. One fund bet on a speculative build without a REIT exit. The result: capital locked, IRR delayed.
In this sector, the exit is part of the build.
The Bottom Line
Most projects don’t fail because of weak demand. They fail because of operator mistakes.
The winners of the AI era won’t be the boldest. They’ll be the most disciplined.
If you’re raising or building, save this list. It might save your project
solid breakdown, it's easy to get caught up in the excitement of a new project and overlook the foundational issues. Things like power timelines and financial structures are often the first to get mismanaged, and they're the hardest to recover from. a great reminder that discipline and a focus on fundamentals are what really drive success.
Great list! And this is just for the LLM / ML training data centers.