Navigating Data Center Challenges

Mortenson’s Maja Rosenquist and CBRE’s Gordon Dolven examine one of real estate’s most dynamic sectors. They discuss how AI’s growth has accelerated data center development, how site-selection strategies are evolving and the challenges posed by power constraints.

Key takeaways on data center trends:

·     Data center site selection is increasingly dictated by access to scalable power, increasing  development in markets with robust energy infrastructure.

·     AI-driven demand is accelerating the need for hyperscale campuses, with some sites spanning thousands of acres and requiring gigawatt-level capacity.

·     Lease structures are based on power usage rather than square footage, with rental rates rebounding over 50% since 2021 due to limited availability.

·     Long-term capital is flowing into the sector, with infrastructure funds driving a shift in investment strategies.

·     Labor and construction cost pressures are prompting innovations like prefabrication to meet the demands of billion-dollar builds.