When it comes to the data center industry, staying informed about evolving development models is critical. And recently, Powered Shells have gained significant attention in the market.

We sat down with industry experts David Liggitt and Mike Netzer to discuss the rise of Powered Shell data centers and their role in meeting today’s increasing demand for efficient and adaptable infrastructure. This blog explores everything from the history of Powered Shells to the benefits they offer end-users, data center operators, and developers.

What is a Powered Shell?

A Powered Shell is a purpose-built, secure data center facility that includes the physical structure, power to the site, and connectivity options, such as proximity to fiber providers. However, it omits critical IT infrastructure like UPS (Uninterruptible Power Supply) systems, generators, and cooling systems, allowing end-users to install their own components.

This model contrasts with Turnkey Data Centers, which include all necessary IT equipment, ready for immediate operation. Powered Shells provide a flexible and cost-effective alternative, with leasing arrangements typically based on square footage rather than the industry-standard price per kilowatt (kW).

A Brief History of Powered Shells

Powered Shells originated during the late 2000s to address the needs of enterprises that wanted greater customization in their data center infrastructure. While this concept initially gained traction, the industry began shifting toward co-location models where companies lease ready-to-use capacity and focus solely on hosting their servers without owning the infrastructure.

Fast forward to today, and we’re seeing renewed interest in Powered Shells, driven by growing hyperscale demand and the appetite for operational control over the design, deployment, and management of infrastructure.

Why Are Powered Shells Gaining Popularity Now?

The modern data center landscape looks vastly different from that of a decade ago. Key factors contributing to the renewed interest in Powered Shells include:

1. Hyperscale Investment

Big-name companies like Amazon, Microsoft, Google, and Meta are making massive investments in data center infrastructure—announcing plans to spend $100 billion, $80 billion, $75 billion, and $60–80 billion respectively. This surge in demand for scalable solutions drives innovative approaches like Powered Shell development.

2. Speed to Market

To keep up with rapid growth, companies are seeking faster ways to bring data center capacity online. Powered Shells provide an advantage by allowing end-users to set up critical infrastructure and operations in less time.

3. Flexibility and Customization

Unlike Turnkey models, Powered Shells offer end-users the flexibility to install and manage their own IT, power, and cooling equipment. This approach is particularly appealing to organizations with unique requirements, such as liquid cooling or customized design preferences.

4. Capital Allocation Efficiency

For many businesses, building a full Turnkey data center is cost-prohibitive. Powered Shells reduce upfront capital demands while still delivering a secure, scalable solution.

Key Benefits of Powered Shells

Powered Shells aren’t just a convenient option—they provide several notable advantages:

For End-Users:

• Operational Control: Manage and customize the infrastructure to meet specific needs.
• Speed to Market: Deploy infrastructure faster than building a facility from scratch.
• Cost Efficiency: Lease based on square footage and invest only in necessary IT infrastructure.

For Data Center Operators:

• Revenue Model Flexibility: Offer a hybrid leasing approach, combining Powered Shell and Turnkey options.
• Reputation Building: Establish credibility by catering to hyperscale end-users and delivering adaptable solutions.

For Developers:

• Lower Risk Entry: Enter the data center market with less capital intensity compared to Turnkey development.
• Gateway to Turnkey Models: Build trust and expertise to eventually transition into Turnkey projects.

What Does a Powered Shell Include?

Here’s a breakdown of what’s typically included and excluded in a Powered Shell development:

Included:

• Physical building (often designed with hardened shells for security).
• Power infrastructure to the site.
• Proximity to fiber providers for connectivity.

Excluded:

• UPS systems.
• Generators.
• Cooling systems or advanced IT infrastructure.

End-users are responsible for equipping and operating the facility, offering them the ability to tailor it to their unique requirements.

Geographic Trends and Market Adoption

Powered Shell developments have historically been concentrated in key markets like Northern Virginia, which accounts for approximately 100 of the 130 Powered Shell deals tracked globally. However, this model is gaining traction in other regions due to constraints around land availability, power, and evolving end-user needs.

Developers and operators looking to expand internationally should also monitor markets like Europe. For example, a recent €200 billion investment in France for AI and data center infrastructure highlights the growing demand beyond the U.S.

Challenges and Design Considerations

Although Powered Shells offer significant opportunities, they also come with challenges. Developers must:

• Understand Design Changes: End-user preferences can shift mid-project, requiring modifications to accommodate air or liquid cooling systems, multi-story designs, or other specific needs.
• Balance Risk and Reward: Powered Shells have lower development costs than Turnkey data centers (estimated at $4–8 million per megawatt compared to $12–13 million), but they offer different returns and risk profiles.
• Cater to Evolving User Preferences: Successful developers must align their projects with the preferences of major hyperscale users and anticipate market trends.

Looking Ahead

As data center deals grow in size—often exceeding hundreds of megawatts—hybrid models combining Powered Shell and Turnkey facilities are becoming increasingly common. These arrangements allow developers to balance capital allocation while meeting diverse client needs.

Powered Shells also provide a natural entry point for industrial developers entering the data center market. By leveraging their expertise in building large-scale industrial sites, these developers can adapt their portfolios to serve the growing digital infrastructure sector.

Final Thoughts

Powered Shell data centers represent an innovative approach to tackling the complexities of today’s data center market. Offering operational flexibility, scalability, and efficient capital deployment, they cater to the needs of hyperscale companies, developers, and operators alike.

Interested in staying ahead of the curve? Visit reach out to our team to gain deeper insights, explore market trends, and make informed decisions in the data center space.