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Investing in data centers

PERE’s 2026 Data Center report takes a look at how certainty is emerging as the next differentiator

Data centers remain one of private real estateโ€™s fastest-growing sectors, fueled by AI, cloud computing and rising digital infrastructure demand. But as the market matures and attracts more institutional capital, investors are looking beyond growth alone. Access to power and land, technological change, community opposition and execution risk are increasingly shaping investment decisions. In a sector long defined by scarcity, certainty is becoming a valuable competitive advantage.

INSIDE THE REPORT

Data center and energy storage; OBX template C

Five themes illuminating data center investing

Demand remains exceptionally strong, but the industryโ€™s rapid expansion is creating new constraints around power, land, labor and community acceptance.

Coming October 5…

  • The new risks in data center investing
  • New data center fault lines emerge
  • Sustainability takes center stage in development
  • Data centers capture a growing share of capital

FURTHER COVERAGE

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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.

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 โ€“ whether work or play โ€“ 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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