Melbourne Data Centre Construction: $1.2B Projects Boost Local Work

Melbourne data centre projects valued at more than $1.2 billion reached financial close in the past 12 months, with construction contracts now flowing to engineering and cabling companies based in the western suburbs.

The surge follows global hyperscale operators committing new capacity in Australia to handle rising AI workloads, with site selections accelerating after the federal government released updated grid connection rules in March 2026.

Precincts already seeing work

Contractors operating out of the Docklands waterfront precinct secured early packages for power and cooling systems on a 40-megawatt facility under construction near Footscray Road. A second cluster of fit-out contracts went to firms with yards along the Monash Freeway corridor, where a 25-hectare site in Clayton South began ground works last month.

Both locations sit within 15 kilometres of existing high-voltage substations, cutting connection timelines for developers who moved quickly after the Australian Energy Market Operator published its 2025-26 demand forecast.

Numbers behind the pipeline

Industry estimates place Melbourne’s share of national data centre capacity at 38 percent by the end of 2027, up from 29 percent in 2024, according to a June report from the Property Council of Australia. Average rack power density has climbed to 15 kilowatts, pushing operators to pay between $8,500 and $12,000 per square metre for purpose-built halls.

Local electrical wholesalers along Bell Street in Preston reported a 47 percent rise in transformer and switchgear orders in the June quarter compared with the same period last year.

Firms that already hold pre-qualified supplier status with the major operators are now prioritising recruitment of commissioning engineers and fibre technicians ahead of the next round of tenders expected in September.