Technology

AI’s appetite for electricity is forcing investors and developers to rethink how data centers grow, with renewable energy moving from the sidelines to the heart of operations, writes Elisabeth Jeffries.

Investors are on alert for a growing number of red flags that extend beyond power and land access to sustainability, cybersecurity and data sovereignty.

What is a data center worth when technology changes faster than the buildings housing it?

PEI Group data shows that investors and managers continue to prioritize technology-focused real estate despite a tougher fundraising environment.

After years of growth, data centers are no longer a niche alternative; they are booming and have become foundational exposure to investment portfolios and the global economy, say Mike Armstrong and Michael Lee of GI Partners.

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

Scarce power, rising AI workloads and evolving technology are reshaping where data centers get built and how they are financed, say Principal Asset Management’s Casey Miller and Sebastian Dooley.

Data centers often steal the headlines, but digital infrastructure is a broader asset class, says Matteo Colombo, head of digital infrastructure investments at L&G.

As data centers scale in size and complexity, hyperscalers are relying more on investors and managers with the capital and expertise needed to deliver projects, says Blue Owl’s Alexey Teplukhin.

Durable demand supports sector growth, but widening dispersion is placing a premium on market selection, disciplined underwriting and experienced operators, says Mike Gordon, global CIO – real estate at Harrison Street Asset Management.