Powered Shell Data Centers: Everything You Need to Know
- Yoann Hispa
- Jan 10
- 6 min read
In the high-stakes race for AI dominance, "Speed to Market" has transitioned from a boardroom buzzword to a survival requirement. For data center developers, the traditional 36-month construction cycle is no longer fast enough to capture the demand of the burgeoning AI sector.
This is where the Powered Shell becomes the developer’s most strategic asset. By providing the structural foundation and critical power hookups without the restrictive "one-size-fits-all" interior of a turnkey build, developers can offer the agility that hyperscalers and AI firms crave. These unique facilities strike a balance between a foundational infrastructure and tenant-specific adaptability, making them particularly attractive to cloud providers, enterprises, and other tech-driven organizations.
In a market where 9 months can make or break a deal, having the data to prove "power-on-site" is your greatest competitive advantage. LandGate provides comprehensive tools for data center developers for site selection, due diligence, and more. Learn more and book a free demo below:
What Are Powered Shell Data Centers?
Powered Shell data centers are partially completed facilities designed to house computing infrastructure. Essentially, a Powered Shell provides the heavy infrastructure, like the building envelope, raw utility power, and fiber access points, without the prescriptive interior fit-out. By omitting the UPS systems, backup generators, and cooling arrays, this model allows tenants to bypass the rigid configurations of a Turnkey Data Center. Instead of moving into a pre-built environment optimized for yesterday's hardware, operators can transform these shells into specialized Inference Hubs or AI Factories. Tenants can customize the interior to meet their operational needs.
Key Characteristics:
Flexible Design: The interior is unfinished, allowing complete customization.
Basic Infrastructure: The landlord ensures the facility has foundational elements like power access and network connectivity.
Varied Sizes: These facilities can range from single-floor segments within a larger building to standalone multi-acre campuses.
Developed for High Demand: Powered Shell data centers are well-suited for large-scale tenants like cloud computing providers, colocation companies, and enterprises managing AI workloads.
For instance, a hyperscale cloud provider like Amazon Web Services (AWS) might lease a Powered Shell facility and tailor it to handle high-density computing needs like artificial intelligence (AI) and machine learning applications.
Why Hyperscalers Choose Powered Shell Data Centers
The primary advantage of a Powered Shell is the compression of the development timeline. By offloading the complex interior fit-out- which often involves long-lead mechanical items and proprietary cooling layouts- to the tenant, developers can hand over the keys in half the time.
The Efficiency Gap: Speed to Market Comparison
Metric | Powered Shell Data Center | Ground-Up Custom Build |
Delivery Timeline | 9-18 months | 18-36+ months |
Permitting Focus | Exterior/ zoning/ shell | Full MEP/ structural/ environmental |
Primary Risk | Utility interconnection | Supply chain & construction delays |
Tenant Readiness | Rapid customization | Linear build-out |
Capital Costs | Higher up-front investment | Lower up-front investment, higher lease costs |
Primary Benefits of Powered Shell Data Centers
Key benefits of Powered Shell data centers include customization and operational control, faster deployment, cost efficiency, and scalability.
1) Customization and Operational Control
One of the most significant benefits of Powered Shell data centers is the flexibility to adapt the facility to meet highly specific technical requirements. Tenants can modify critical components like:
Power Configuration: Architecting setups with redundancy options for uninterrupted service.
Cooling Systems: Implementing air-based or liquid cooling solutions that align with operational efficiency targets.
Security Features: Designing custom security layouts to mitigate physical risks.
Structural Adjustments: Strengthening buildings to withstand natural disasters, like hurricanes or earthquakes.
A Powered Shell provides a blank canvas, allowing tenants to install specialized direct-to-chip or immersion cooling systems. This flexibility allows them to transform a standard shell into a high-performance AI factory tailored to their proprietary hardware stacks. This level of autonomy is especially appealing to organizations with unique technical needs who need their data environments to operate reliably and securely.
2) Faster Deployment
Compared to building a data center from the ground up, Powered Shell facilities drastically reduce the time it takes to bring a space into operation. This is because:
Initial construction hurdles, like entitlements and permit approvals, are already resolved.
Core utilities, such as power infrastructure and connectivity options, are pre-installed.
Modular construction methods speed up the tenant customization phase by preassembling components like cooling units offsite.
On average, completing a Powered Shell data center project, from construction to full operational readiness, takes between 9 to 18 months, significantly faster than traditional new builds.
3) Cost Efficiency
By leasing a Powered Shell facility, companies avoid the upfront capital expenses tied to land acquisition and large-scale construction. Instead, tenants can focus their resources on internal customizations like IT hardware and environmental controls.
Furthermore, the use of pre-manufactured modular components reduces on-site construction costs, shortening timelines while ensuring high-quality installations.
4) Scalability
Powered shell data centers often cater to hyper-growth businesses that need the flexibility for phased expansions. A tenant can initially occupy part of the facility and incrementally lease additional space or energy capacity as their needs evolve.
How are Powered Shell Data Centers Developed?
While timelines vary by strategy and scale, developments typically involve six to twelve months for exterior shell construction, which includes entitlements and basic infrastructure setup, followed by an additional three to six months for tenant-specific electrical systems, cooling, and IT equipment installation.
The development of Powered Shell data centers falls into three main categories, each tailored to meet varying levels of demand:
1) Full Construction and Customization
The most common approach involves building a complete exterior shell while the interior remains unfinished. The tenant signs a lease for this space and customizes it based on their needs, for example, by adding high-performance cooling and backup power systems.
2) Phased Build-Out
Under this model, construction progresses in stages, aligning with tenant demand. Only portions of the building are prepared for occupancy at a time, ensuring efficiency in capital allocation.
3) Retrofitting Existing Buildings
Some developers repurpose buildings originally designed for other uses (e.g., warehouses) into Powered Shells. This method can be faster and more cost-effective than constructing new builds, provided the structure meets data center-specific criteria like ceiling height and floor-load capacity.
Who Uses Powered Shell Data Centers?
Powered shell facilities attract a wide range of tenants, such as:
Cloud Service Providers (CSPs) like AWS and Google, who need scalable space for cloud computing.
Colocation Providers, offering facilities to businesses that don’t want to operate their own data centers.
Enterprises with high-demand private cloud requirements.
Telecommunications Providers, setting up infrastructure to support global connectivity.
Cryptocurrency Miners, requiring energy-dense environments to support blockchain operations.
An example of this is AWS’s usage of multiple powered shell properties in Virginia, where their facilities handle over 1 gigawatt (GW) in total power capacity.
Key Players and Market Trends
Global demand for powered shell data centers is growing, fueled by surging cloud adoption, AI workloads, and edge computing requirements. Major players in this space include:
Digital Realty: A leader in this market with its Powered Base Building (PBB) solution.
CyrusOne: Holding over 1.7 million square feet of powered shell space ready for development.
QTS Data Centers: Specializing in powered shells with modular, scalable designs.
Blackstone (through BREIT): Owning large-scale powered shell portfolios in Virginia.
How are Powered Shell Data Centers Priced?
Development costs for powered shells generally account for 10-20% of the total cost of a fully operational data center. The financial structure of a powered shell is fundamentally different from a turnkey or colocation agreement. For developers, this often results in more predictable, long-term real estate returns.
The Triple-Net (NNN) Lease
Powered shells are almost exclusively leased under a Triple-Net (NNN) structures that last 10-20+ years. In this model, the tenant is responsible for the "three nets": property taxes, insurance, and maintenance.
Pricing Model: Typically quoted in $/SF (Price per Square Foot). Annual lease rates range from $10 to $25 per square foot, depending on location.
Advantage: Since the developer isn't managing the power usage or the complex cooling repairs, the lease functions more like traditional industrial real estate but at a premium data center valuation.
The Turnkey Model
Conversely, turnkey facilities are priced based on capacity.
Pricing Model: Quoted in $/kW (Price per Kilowatt) of critical load.
Difference: This includes the cost of the developer providing the UPS, generators, and cooling, which carries significantly higher CAPEX and operational risk.
Final Thoughts
Powered shell data centers are the perfect middle ground for organizations looking for tailored solutions without the burden of full-scale construction. By blending foundational infrastructure with customization opportunities, they allow tenants to create high-performance environments aligned with their goals.
Whether you're a hyperscaler preparing for AI-powered growth or an enterprise seeking greater operational control, LandGate® provides all essential data in site-seeking in today’s fast-evolving digital landscape.
