Q&A: Data Center Powered Land Acqs
I work in powered land acquisitions at one of the largest data center developers, owners, and operators in the U.S. AMA - happy to answer what I can.
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Can you talk about data center obsolescence? Is the stuff built in the 1990s, 2000s, and 2010s still really in use? Do you think the average data center built today will have a useful life that extends meaningfully beyond the initial lease term?
Great Q. data centers can absolutely remain useful well beyond a typical 15 year lease term. The buildings and underlying infrasrtucture (power, fiber, location) don’t become obsolete nearly as quickly as the IT equipment inside them. As cooling evolves and rack densities increase, the facilities will need to adapt and be retrofitted or upgraded.
25-50 MW DCs from 10+ years(5-10 acres) are still in use, but given hyperscalers and developers are targeting sites to with a clear path to 1 GW+(hundreds of acres) in remote areas, it reinforces how important power availability is compared to initial design.
How is your firm thinking about power supply to the data centers? With a lot of the local discussion around data centers revolving around increasing electricity costs to neighbors, are you also partnering with the county/state to produce local power or is that discussion being held with an entirely different party?
Thanks for posting - couple of questions:
What are avg yields on deals being green lit today?
What do the buyer pools look like at exit?
How much of your land acquisition pipeline is speculative vs. BTS/fee development assignments?
What do you think of career prospects for of “in-house” positions tech companies (meta, Amazon google, etc.)?
How the heck do I break into the Owner side of this asset class without DC experience? Seems impossible.
(1) Hyperscalers all have data center teams. You can get in on these teams directly or you can get a job in a finance and DC-related role at one of them and lateral.
(2) I know a number of data center developers (think the owners of the data centers that CoreWeave leases). They often look for real estate experience.
I currently work at as analyst triple net lease fund and would like to break into datacenter space. Do you have an recommendations on what to read up on and how to get in the door?
Do you know how sweaty the shops are that got bought or have major JVs with the big boy funds (Blue Owl, BX, etc.) and how's the culture compared to a typical dev shop? Seems like everyone's going through major reorg's right now due to volume and velocity.
General thouhts on investments teams at the major REITs (exposure, progression, personel turnover, etc.)? Thanks!
What is the project lifecycle like in terms of time and critical paths for non-powered, unentitled sites to become powered and shovel-ready?
How many US powered land sites are there on the market today that can reasonably get to ~1 GW? How frequently do new sites of that size come to market in the US? (not asking for exact numbers just a general sense of how common these opportunities are and competitive pressures)
Are the big data center developers ever going long on land (i.e. closing on land prior to receiving jurisdictional approvals, executed leases etc)? Or sticking to shovel ready? How tolerant are the debt capital markets of business plans with a speculative component in the leasing?
Do you get the sense that you have to set high expectations for future revenue growth in your underwriting to pencil a competitive offer on land deals today?
How heavily are the major data center developers relying on tenant reps to bring them tenant demand?
What is the realistic proportions of power strategies in powered land these days? Hyperscalers who build and own the datacenter can just also balance sheet onsite gas (Colossus). On the other end some tenants are leasing datacenters that have load interconnect but with the utility bringing on capacity elsewhere on its grid (Google/DTE/Xcel). Seems like very little is holy grail "bridge powered land" play where a small-ish developer is siting gen onsite, third party financing against a hyperscaler lease/PPA, and bridging until a load/gen interconnect in 3-5 years. Thoughts?
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