A powered shell lease delivers a building with utility power, structure and fiber, and the tenant installs its own mechanical and electrical fit-out; a turnkey lease delivers a finished data hall. The landlord’s capital in a shell is roughly 35 to 45% of a turnkey build, about $3 to 5M per MW against $10 to 13M per MW (StackedAI analysis, transaction structures framework, 2026).
Key terms
- Powered shell: a building with utility service, slab, roof, security perimeter and fiber entry in place, without UPS, generators, switchgear or cooling.
- Turnkey data hall: a fully fitted space where the landlord provides critical power, cooling and distribution and the tenant installs IT equipment only.
- Build-to-suit (BTS): a development lease in which the landlord constructs to the tenant’s specification, delivered as a shell or a turnkey hall.
- Development yield: stabilized net operating income divided by total development cost, used to price build-to-suit leases.
- Re-leasing capex: the landlord’s cost to refresh mechanical and electrical plant between tenants, borne only in a turnkey structure.
What does each structure include, and who pays for what?
Both structures split the same physical data center at a different line. The landlord always owns the land, envelope and utility interconnection; in a shell the tenant funds everything from the switchgear inward, and in a turnkey hall the landlord funds that plant and recovers it through rent per kW of critical load.
| Item | Powered shell | Turnkey |
|---|---|---|
| Land, envelope, utility interconnection | Landlord | Landlord |
| Generators, UPS, switchgear, cooling plant | Tenant | Landlord |
| Landlord capex per MW | ~$3–5M | ~$10–13M |
| Landlord capex as share of turnkey | ~35–45% | 100% |
| Rent basis | Per square foot or per MW of delivered utility capacity | Per kW of critical load |
| Typical tenant | Hyperscaler, AI lab, large operator | Enterprise, neocloud, colocation customer |
| Typical size and term | 100 MW–1 GW, 10–20 years | Sub-MW to tens of MW; varies by market |
| Obsolescence risk on plant | Tenant | Landlord |
| Disclosed pricing reference | 6.6% cap rate, DLR shell portfolio (Mapletree Industrial Trust, 2020) | 7.5–8.5% development yield, 15-year hyperscaler NNN (Alantra, Data Center M&A Review, 2024) |
Capex, size and term rows: StackedAI analysis, transaction structures framework, 2026.
The $10 to 13M per MW turnkey figure is a conventional air-cooled or hybrid benchmark; JLL puts 2026 average construction cost at $11.3M per MW and AI fit-outs at up to $25M per MW (JLL, 2026 Global Data Center Outlook, Jan 2026), and Cushman & Wakefield cites $17.6M per MW for the most modern facilities (Cushman & Wakefield, 2026 Data Center Development Cost Guide, Aug 2026).
Who takes which risk?
The capex split is also a risk split.
The shell landlord takes land, entitlement, power procurement and envelope construction risk, then holds a long single-tenant lease. If the tenant leaves, the shell is worth its power, because the tenant’s plant is removed or stranded; shell landlords therefore care more about the utility agreement than the building.
The shell tenant takes fit-out capex, equipment obsolescence and supply chain risk. A hyperscaler accepts this because it has proprietary designs and procurement scale; an enterprise usually does not, which is why shell leases cluster at 100 MW to 1 GW (StackedAI analysis, transaction structures framework, 2026) rather than at enterprise sizes.
The turnkey landlord adds plant obsolescence and re-leasing capex. As average rack density moves from 16 kW in 2025 toward 27 kW in 2026, with AI racks at 50 to 70 kW (StackedAI analysis, density roadmap from Goldman Sachs and Dell’Oro, 2026), a hall fitted for legacy densities of 5 to 15 kW per rack (StackedAI analysis, Cooling Solutions note, 2026) may need a cooling retrofit before re-letting; see liquid cooling retrofit cost.
The turnkey tenant takes the least risk and pays for it in rent: asking rent for 250 to 500 kW requirements reached $195.94 per kW per month at year-end 2025, up 6.5% year on year (CBRE, North America Data Center Trends H2 2025, Feb 2026).
What are the lease term norms?
Hyperscaler shell and build-to-suit leases run 100 MW to 1 GW on 10 to 20 year terms (StackedAI analysis, transaction structures framework, 2026). The AI-era template is a 15-year base term with 3.0% annual escalators, as in the Hut 8 and Fluidstack 245 MW agreement (StackedAI analysis, NNN DC Lease Universe, Jul 2026). Portfolio WALE for NNN data center REITs runs 6.7 to 9.1 years at acquisition, while fresh sale-leasebacks are written at 15 to 16 years (StackedAI analysis, NNN DC Lease Universe, Jul 2026). Turnkey and colocation terms are shorter and more varied; figures vary by market, and StackedAI benchmarks these per engagement.
How does each structure price?
A powered shell with a long lease to investment-grade credit is close to a ground lease with a building on it: the landlord earns a return on a low cost basis with almost no operating exposure. Digital Realty’s powered-shell portfolio sold to Mapletree Industrial Trust at a 6.6% cap rate in 2020 (Mapletree Industrial Trust, 2020), on NNN structures with 1.5 to 3% escalators (StackedAI analysis, NNN DC Lease Universe, Jul 2026).
Turnkey and build-to-suit leases carry more capital and equipment risk and are priced on development yield rather than cap rate: Alantra places 15-year NNN leases with hyperscaler tenants at 7.5 to 8.5% (Alantra, Data Center M&A Review, 2024). Two cautions apply. As of August 2026 the major brokerages have not published a data-center-specific cap-rate series, so these are transaction benchmarks, not market averages, and the spread between them also reflects vintage, credit and lot size. A fuller table is on data center sale-leaseback cap rates.
How does 10-year total cost of ownership compare?
For a tenant, the ten-year comparison is capex plus rent under a shell against rent alone under turnkey. Under a shell the tenant funds roughly $7 to 10M per MW of plant up front (the gap between the $3 to 5M shell and $10 to 13M turnkey benchmarks, StackedAI analysis, transaction structures framework, 2026) and pays a lower rent on the landlord’s smaller basis; under turnkey it pays a higher rent that amortizes the landlord’s plant plus a return on it.
The shell wins when three conditions hold: the tenant’s cost of capital is below the landlord’s required yield, the tenant can procure and operate plant at or below the landlord’s cost, and the tenant will occupy the site for the full term. Hyperscalers meet all three; an enterprise with a 10 MW requirement typically meets none, which is why the turnkey premium is worth paying at enterprise scale and why an enterprise that already owns plant is better served by a sale-leaseback than a new shell. The conversion alternative is compared on brownfield vs greenfield cost per MW.
How StackedAI applies this
StackedAI treats powered shell and turnkey as the third and fourth rungs of a four-rung value ladder (sell the power, powered land, powered shell, turnkey) when advising owners how far to take a site before selling or leasing it. For sponsors evaluating an NNN acquisition, the firm classifies each lease in its universe by which party owns the plant, because that determines re-leasing capex and the residual. The distinction underpins NNN data center lease scarcity and the owner map on who owns NNN data center leases.
Frequently asked questions
What is a powered shell data center?
A powered shell is a building delivered with utility power, structure, security and fiber entry but without mechanical and electrical fit-out. The tenant installs and owns the UPS, generators, switchgear and cooling. StackedAI benchmarks shell capex at roughly $3 to 5M per MW against $10 to 13M per MW for turnkey (StackedAI analysis, transaction structures framework, 2026).
What does a turnkey data center lease include?
A turnkey lease delivers a fully fitted data hall: the landlord owns the cooling plant, UPS, generators and electrical distribution, and the tenant brings only IT equipment. The landlord carries the fit-out capital and the obsolescence risk on that plant, and rent is quoted per kW of critical load rather than per square foot.
Why do hyperscalers prefer powered shell leases?
Hyperscalers have proprietary mechanical and electrical designs and procurement scale, so they prefer to control the fit-out. Their shell leases run 100 MW to 1 GW on 10 to 20 year terms (StackedAI analysis, transaction structures framework, 2026), and they accept the capex because the landlord’s cost basis, and therefore rent, is roughly 35 to 45% of a turnkey equivalent.
How does a powered shell lease price compared with a turnkey lease?
The disclosed powered-shell benchmark StackedAI cites is a 6.6% cap rate on Digital Realty’s portfolio sale to Mapletree (Mapletree Industrial Trust, 2020). Turnkey and build-to-suit leases with hyperscaler tenants are underwritten to 7.5 to 8.5% development yields (Alantra, Data Center M&A Review, 2024), reflecting the landlord’s larger capital and equipment risk.
Which structure suits an enterprise tenant of 5 to 25 MW?
Most enterprises lack the engineering and procurement scale to fit out a shell efficiently, so turnkey or colocation is the practical route unless the enterprise already owns a data center. An owner-occupier is usually better placed to monetize its facility through a sale-leaseback than to lease a new shell.
Who takes obsolescence risk in each structure?
In a powered shell the tenant owns the fit-out and carries obsolescence risk on cooling and electrical plant as rack densities rise. In a turnkey lease the landlord carries that risk and funds re-leasing capex when the tenant leaves, which is the main reason turnkey leases require a higher yield than shell leases with the same tenant credit.
Sources
- StackedAI analysis, Transaction structures framework, 2026 (internal)
- StackedAI analysis, NNN DC Lease Universe workbook, Jul 2026 (internal, aggregated findings only)
- StackedAI analysis, density roadmap compiled from Goldman Sachs and Dell’Oro, 2026 (internal)
- StackedAI analysis, Cooling Solutions note, 2026 (internal)
- Alantra, Data Center M&A Review, 2024 (as compiled in the NNN DC Lease Universe)
- Mapletree Industrial Trust, acquisition of Digital Realty powered-shell portfolio, 2020 (as compiled in the NNN DC Lease Universe)
- JLL, 2026 Global Data Center Outlook, Jan 2026, https://www.jll.com/en-us/insights/market-outlook/data-center-outlook
- Cushman & Wakefield, 2026 Data Center Development Cost Guide, Aug 2026, https://www.cushmanwakefield.com/en/united-states/insights/data-center-development-cost-guide
- CBRE, North America Data Center Trends H2 2025, Feb 2026, https://www.cbre.com/insights/books/north-america-data-center-trends-h2-2025