- Iron Mountain's Mark Kidd said the industry is solving its labor shortage by hiring from each other, a fix he called unsustainable
- Labor shortages contribute to rising data center construction costs
- Kidd said power constraints act as a governor on AI, buying time for public debate that speed would otherwise foreclose
Data center labor is scarce enough that operators now hire it away from one another, and Iron Mountain says the wage inflation that follows lands on customers.
"We end up hiring from each other and driving up wages, which isn't a bad thing for those that have [skills]," said Mark Kidd, EVP and GM of Iron Mountain's data center and asset lifecycle management businesses, in an interview with Fierce. "But it's not sustainable, because ultimately this cost gets passed back onto the user."
Operators are investing in college and trade school partnerships to address the shortage of electricians, technicians and mechanical specialists. Poaching is a more immediate solution to the problem, though it's one that drives up costs.
Building a traditional air-cooled facility for cloud workloads costs 5.5% more per watt in 2025 than a year earlier, down from a 9% jump the year before, according to Turner & Townsend's data center construction cost index. But bids tell a harsher story than the index: 47% of survey respondents reported tender price increases of 6% to 15% over the previous year, and another 21% reported increases above 15%.
Final construction costs are up roughly 5% this year, and JLL expects them to climb faster after midyear. Construction employment will expand only 0.6% this year, against a long-run norm of 2.7%, and 61% of U.S. metro markets are supply-constrained, a share JLL expects to reach 72% by 2027.
Labor and materials costs are making contractors cautious. Some contractors, including in Northern Virginia, Texas and Arizona, may decline to bid unless the contract lets them pass along increases in labor and materials, according to a Berkeley Research Group analysis.
Power is the harder ceiling
Power is becoming the binding constraint on the AI buildout, Kidd said — and he argued that is not entirely bad.
"Power is becoming the constraint to how many models can be built, how fast the inference can be deployed," he said. Without that limit, he said, the industry would be building faster than anyone could evaluate what it was building.
"Would we have enough time to think through all the pros and cons of the technology we're building? I don't know," Kidd said. A constraint creates room for legislation and public argument, he said, "whether or not you agree with the outcome. The process is key to everything."
One way to keep costs down is to build data centers near power supplies, Kidd said. Transmission is a large share of energy bills, driving up costs for everyone. Transmission costs fall when the load sits near the source.
Renewables and batteries alone cannot meet the demand on the U.S. grid today, Kidd said, which raises the question of what bridges to a greener supply. "It seems to be natural gas," he said, adding that there is no settled agreement on the point.
The need to refresh servers adds another labor cost. "The actual servers themselves only have a five- to seven-year life," Kidd said. "You've got to yank them out, put new ones in." Because buildings last decades, each slot cycles through three or four hardware generations, needing technicians to rack, cable, decommission and replace.
Who's signing the leases
Iron Mountain built its data center business more than 10 years ago around enterprise customers and did not focus on hyperscalers until the end of the decade, Kidd said. That mix has inverted. The installed base still runs close to even, but new leasing now runs 70-80% or higher to hyperscalers and neocloud providers, with enterprises down to 10-15%.
The shift is changing how connectivity gets bought, too. Iron Mountain historically ran carrier-neutral facilities, bringing multiple telcos into a building so tenants could reach them all. Hyperscalers taking whole buildings increasingly skip that, acquiring dark fiber or lit services directly to connect back to their own availability zones.
Iron Mountain reported second-quarter revenue of $2.03 billion on Aug. 5, up 18.5% year over year, leased 110 megawatts through July and raised full-year guidance.
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