Data center real estate deals skyrocket By EPN Staff Analysts are tracking a massive crop of proposed new data centers, with one of the world’s largest commercial real estate firms saying demand is so high that pre-leasing of new centers before construction is even complete will likely hit 90%. CBRE said in its 2025 Real Estate Market Outlook that it expects to see 4,750 megawatts worth of data center projects under construction this year alone - record activity that will still struggle to keep pace with demand. Wood Mackenzie, a research and consulting firm, says it’s tracking a total of 134 gigawatts worth of proposed data centers across the US, up from 50 GW a year ago. Why it matters These projects may not all come to fruition. Utilities suspect the same data center projects have been pitched in multiple states as tech companies scramble to find capacity. Nevertheless, the demand is huge. McKinsey & Company, another consulting group, said in April that it expects the world will need nearly $7 trillion in data center capital spending by 2030 to keep pace with the demand for computing power. All this demand is affecting power grids in the United States, as well as real estate markets. CBRE said it expects the data center footprint to expand outside of business districts and urban areas as competition heats up for limited power resources. And these will be big projects: CBRE said 100+ megawatt projects will become “the new norm.” The bigger picture Wood McKenzie said it expects major projects to favor states with regulated monopoly utilities, which are “emerging as leaders in capturing the growth opportunity” while “deregulated markets are struggling to accommodate large loads” But in every state there are multiple bottlenecks, the firm said, including “bottlenecks for critical pieces of equipment” and bottlenecks in connecting to the power grid, which in many cases need transmission upgrades to expand. There’s also the question of who pays for new infrastructure to power these facilities and whether energy demand ultimately exceeds supply. “The large load demand being met by regulated utilities are raising a host of new issues for regulators and could ultimately expose existing customers to picking up the tab for investments to serve data centers if this demand does not materialize as anticipated,” Wood Mackenzie Vice Chairman for Energy Transition and Power & Renewables Chris Seiple said. “In a competitive power market, if data centers are added at a pace faster than new power plants can be brought online, it could threaten grid reliability and lead to power outages.” More context CBRE said it sees a number of impacts as companies compete for limited resources: Construction worker shortages will drive local community colleges and technical schools to increase their number of mechanical, electrical and plumbing certifications and degrees Nuclear development - both large and small scale - will expand, especially in areas with carbon reduction goals Demand will lead to innovate solutions, like microgrids to power facilities on-site The real estate firm said to “expect extended timelines for new data center builds, particularly in regions where power infrastructure is lagging behind the surge in construction.” Additional details Demand may push projects to new states, but for now Texas and Virginia host the most data centers, by far, in the country, according to Wood Mackenzie. The firm ranked states based on announcements since the start of 2023. The next five states are more tightly bunched: Pennsylvania Georgia Ohio Nevada Arizona
