CBRE: Cost Segregation: Extract Millions from Your Data Center

Data center construction costs average $295 per square foot ($150 to $200 per SF shell, $12M to $18M per MW thereafter depending on the required design resiliency) – only hospitals compare in their costs to construct. With so much cost in every square foot of a data center, it is essential to extract any potential value out of the real estate. One of the easiest ways to create this value is to a pursue cost segregation analysis.

Cost Segregation Fundamentals

The Internal Revenue Service (IRS) requires commercial buildings to depreciate using a 39-year straight-line method. For example, a $39M data center can be written off at a rate of $1M per year over 39 years.

However, through a cost segregation analysis, a significant portion of the building costs can be reclassified from “real property” to “personal property” thus changing its tax depreciation life from 39 years to 5 years.

More of the CBRE post from Eli Varol

Alex Carroll

Alex Carroll

Managing Member at Lifeline Data Centers
Alex, co-owner, is responsible for all real estate, construction and mission critical facilities: hardened buildings, power systems, cooling systems, fire suppression, and environmentals. Alex also manages relationships with the telecommunications providers and has an extensive background in IT infrastructure support, database administration and software design and development. Alex architected Lifeline’s proprietary GRCA system and is hands-on every day in the data center.