Microsoft’s Third Wisconsin Data Center Plan Advances in Racine County

KEY POINTS

• Microsoft is advancing plans to build a third data center in Racine County, Wisconsin, and zoning approvals are moving to the Caledonia Village Board for review.

• The company has committed over $7 billion to Wisconsin, including a $3.3 billion data center campus that will open in 2026 and a $4 billion expansion.

• U.S. data center construction spending hit $13 billion in August 2025, with rising costs driven by complexity, energy demands, and regional development concentration.

Plans for Microsoft’s third Wisconsin data center in Racine County moved forward on September 29, 2025, as the Caledonia Plan Commission approved key zoning changes for the proposed site, Business Insider reported.

In a 5–2 vote, the commission agreed to amend the village’s land-use plan, reclassifying a 245-acre property from agricultural to transitional light industrial use. A second 5–2 vote rezoned the site into a light manufacturing and office district, clearing the way for potential data center development.

Both measures now move to the Caledonia Village Board, which will review and vote on them at its October 14 meeting.

The plans for the project, known as Project Nova by Microsoft, include three large data center buildings and a 15-acre substation to meet the facility’s energy demands. The public documents did not include specific construction details of the planning-stage project. 

An image of the proposed Project Nova project area for the construction of a data center in Racine County, Wisconsin, from a public information meeting held in September 2025. Image: Microsoft; Racine County Economic Development Corp. 

Potential Construction Job Opportunities

Data center projects like these create significant employment opportunities for construction. In a September press release, Wisconsin Governor Tony Evers highlighted the impact: “Construction of the first Microsoft data center has already provided family-sustaining jobs for almost 10,000 Wisconsin workers, including more than 3,000 construction workers during peak operations.”

Microsoft said in a presentation at a September community meeting that during the construction phase of the planned Project Nova data center, its partner-led hiring efforts include a wide range of skilled positions, such as:

•    Electricians
•    Plumbers and pipefitters
•    Carpenters
•    Structural iron and steel workers
•    Concrete specialists
•    Earth movers

Once construction is complete, the company said data center operations will create long-term employment opportunities in fields such as campus and people management, critical environment operations, learning and development, IT operations, and mechanical and electrical engineering.  

Data Centers in the US: Growth Among Rising Costs

Data center construction in the United States is experiencing unprecedented growth, with spending reaching $13.0 billion in August 2025, slightly below July’s record $14.0 billion, ConstructConnect Chief Economist Michael Guckes said in a monthly data center report.

According to Guckes, the current year-to-date total through August of $40.0 billion has already surpassed all spending recorded for 2024.

Due to rising complexity and energy infrastructure demands, average data center project costs climbed to $499 million, and per-square-foot costs increased by 47% year over year.

The data center report emphasized that the rapid expansion of data centers underscores the critical need for power infrastructure. Guckes reported that 2025 power construction starts are projected to reach $23.5 billion and climb above $30 billion by 2027.

These investments are essential to support the growing energy demands of data centers and their impact on economies.

Microsoft’s Expanding Wisconsin Footprint

The Caledonia data center would expand Microsoft’s growing presence in southern Wisconsin if approved. In September, the company announced a $4 billion data center investment in Mount Pleasant, focused on advanced artificial intelligence technology and anticipated to be online in 2028.

This is in addition to the ongoing Mount Pleasant construction of the $3.3 billion Fairwater project, whose first phase is expected to open in 2026.

Microsoft’s investments in Wisconsin now exceed $7 billion, a significant commitment to the region’s development of data centers.