Power constraints are reshaping global expansion strategies
Data centers are no longer a niche play but a core real estate asset class being fueled by exponential growth in AI and cloud demand. Yet surging electricity needs are redefining the sector, pushing development into new geographies and making power procurement a central challenge. For investors and managers, navigating these shifts is critical to capitalizing on opportunity.
INSIDE THE REPORT
AI boom supercharges the data center power conundrum
The gold rush is under way, but sluggish improvement of necessary power infrastructure is impeding development.
Surging AI and cloud demand reshape data center sector
Three themes stand out as particularly influential in shaping the future of investment in the sector.
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Data centers, the physical real estate on which AI depends, are in hot demand as technological advancement places greater demands upon them. But, with great (processing) power comes great responsibility, and data center owners and operators are increasingly confronting issues such as power scarcity or ESG concerns. Managers and investors face a tough task in squaring those circles, but those that do stand to reap the rewards of a rapidly growing sector.
The more we do online – whether work or play – the more we require physical assets; storing data in the cloud requires data centers to house it. Growth in what is now the fifth-largest investment-grade real estate sector is being largely driven by a boom in construction for hyperscale data centers, but edge centers are also experiencing increased demand, providing plenty of options for investors.
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