AI Infrastructure Growth: How Data Centers Are Rewriting the Rules of Commercial Real Estate
Last updated: July 28, 2026 | Estimated reading time: 19 minutes | Core Insights Review Editorial Team
Key takeaways for busy readers
- Data centers have overtaken office construction spending in the United States for the first time on record, and global data center investment hit roughly $580 billion in 2025, up 27% year-over-year.
- Power availability — not land, not zoning — is now the top constraint cited by data center investors for the third consecutive year, according to CBRE.
- Between 30% and 50% of U.S. data center capacity scheduled for 2026 is projected to be delayed or canceled, almost entirely due to grid and equipment bottlenecks.
- Financing has evolved into a hybrid of real estate, energy and infrastructure capital — asset-backed securities tied to data centers grew from about $1 billion in 2018 to roughly $14 billion in 2025.
- Community opposition is now a material financial risk: over $64 billion in proposed U.S. data center projects have been delayed, blocked or abandoned amid local pushback, much of it over water use.
In this article
- Data centers become CRE's premier asset class
- Power access repriced land value
- Financing structures are being rebuilt
- From square footage to megawatts
- Edge computing and industrial spillover
- Development risk and the delay crisis
- Geographic redistribution of demand
- Environmental and community friction
- Tenant mix and operations technology
- Stakeholder advisory: what to do next
- Frequently asked questions
The expansion of AI infrastructure — data centers, compute hubs, and the power and fiber networks that feed them — is no longer a side story in commercial real estate. It is resetting how capital gets allocated, how land gets priced, and which questions an investment committee asks before signing off on a deal. Unlike prior technology cycles, AI is not simply generating tenant demand for existing product types; it is creating an entirely new asset category with its own valuation logic, financing structure and risk profile.
That shift shows up plainly in the numbers. Data centers overtook office buildings in U.S. construction spending for the first time on record in late 2025, and institutional allocators who once measured real estate exposure in square feet are now measuring it in megawatts. What follows is a sector-by-sector look at how that transition is unfolding in 2026, grounded in the research being published by CBRE, JLL, Colliers, S&P Global and other primary trackers.
1. Data Centers Become Commercial Real Estate's Premier Asset Class
Colliers' 2026 Data Center Marketplace Report puts global data center investment at more than $580 billion in 2025, up 27% year-over-year, alongside more than $120 billion in hyperscaler debt issued specifically to fund AI infrastructure. Build costs rose 47% year-over-year over the same period, driven by power intensity and construction complexity rather than land or labor alone. At the top of the market, the combined 2026 capital expenditure guidance from Alphabet, Microsoft, Amazon and Meta is on pace to approach $700 billion — roughly double 2024 levels, according to analysis published by Commercial Property Executive.
CBRE's 2026 North American Data Center Investor Intentions Survey captures how quickly institutional appetite is scaling: more than half of surveyed investors plan to raise data center capital allocations by up to 10% this year, and 55% expect increases beyond that. Primary market inventory grew 36% year-over-year, following 34% growth the year before, yet vacancy has fallen to historic lows — 0.3% in Northern Virginia and roughly 1% in Atlanta. Dallas-Fort Worth has edged out Northern Virginia as the single most attractive market for data center investors in 2026, cited by 78% of respondents versus 72%, largely on the strength of its deregulated power market and available land.
Capital flowing into AI infrastructure real estate, 2025–2026
Sources: Colliers 2026 Data Center Marketplace Report; Commercial Property Executive; HB Capital / Morgan Stanley; CoStar (MSCI data); JLL 2026 Global Data Center Market Outlook
What makes this cycle different from prior real estate booms is durability of demand. Roughly 100 gigawatts of new data center capacity is expected between 2026 and 2030, which JLL estimates will translate into $1.2 trillion of real estate asset value creation alone — before accounting for the additional $1 to $2 trillion tenants will spend fitting out that space with servers and networking equipment. As Michael Rareshide of Site Selection Group put it, describing the shift in his own client base, "investors I wouldn't be talking to three years ago are talking to me today."
2. Power Access Has Repriced Land Value
In 2026, underwriting a data center site now starts with a utility interconnection study, not a location comp. U.S. data center electricity draw climbed from roughly 23 gigawatts in 2023 to about 42 gigawatts in 2026, and AI-driven demand alone could push consumption past 130 gigawatts by the end of the decade, per LandGate's analysis of grid data. The bottleneck is structural: interconnection queues now stretch three to seven years in major utility territories, high-voltage transformers take three to five years to deliver, and switchgear is effectively sold out through 2028.
U.S. data center power draw, gigawatts
Source: LandGate grid capacity analysis (2026)
The clearest evidence of this repricing is in Texas, where CenterPoint Energy reported large-load interconnection requests jumping from roughly 1 gigawatt to 8 gigawatts between late 2023 and late 2024 — a 700% increase in a single year, according to Hanwha Data Centers' review of utility filings. Industrial parcels sitting near an existing substation are now commanding valuations that bear no resemblance to comparable industrial sales without confirmed grid access, because — as one recent analysis of the powered-land premium put it — the substation itself has effectively become the asset's primary source of value, ahead of location, tenancy, or building specification.
3. Financing Structures Are Being Rebuilt Around Infrastructure Logic
Data centers are increasingly underwritten as hybrid assets — part real estate, part energy infrastructure, part technology platform — and the capital stack reflects it. Structured financing volumes have expanded sharply: asset-backed securities tied to data centers grew from about $1 billion in 2018 to roughly $14 billion in 2025, with deal count rising from a handful of transactions to about 35, according to Commercial Property Executive's review of issuance data. CMBS volume tied to data centers reached a comparable $11 billion in 2025, up from levels close to zero just a few years earlier. Ropes & Gray's 2026 industry review notes that private credit has become a core financing mechanism for digital infrastructure, and that underwriting increasingly hinges on committed, investment-grade hyperscale credit rather than the tenant-mix diversification that traditionally protected lenders.
The joint-venture structure illustrates the new dynamic well. Cloud Capital's $6 billion data center partnership with Realty Income and an institutional investor was framed by founder and CEO Hossein Fateh around the value of "long-term tenant relationships" built over decades of leasing cycles — a signal that even as new capital floods in, sponsors with operating history are commanding a premium over newer entrants without a track record.
4. From Square Footage to Megawatts
The valuation vocabulary of commercial real estate is being rewritten. Traditional CRE metrics — price per square foot, occupancy rate, comparable sales — matter far less for data center assets than power capacity, interconnection density, and hyperscaler contract backlog. A facility with fifty megawatts of secured power and direct carrier-neutral interconnection can generate materially more value than a larger building in a secondary market without confirmed grid access, a dynamic that has taken hold across data center REIT underwriting since 2024, according to industry analysis of the sector's capital markets. Rent per square foot is becoming a secondary metric behind revenue per megawatt.
5. Edge Computing and Industrial Spillover
The rise of latency-sensitive applications — autonomous systems, real-time analytics, and increasingly inference-based AI workloads — is pushing compute closer to end users through edge facilities and local zones from providers like Amazon Web Services. JLL's 2026 Global Data Center Market Outlook notes that AI represented only about a quarter of data center workloads in 2025, dominated by model training, but expects inference to overtake training as the primary driver by 2027 as AI moves from development into deployment at scale — a shift likely to accelerate demand for smaller, distributed edge facilities rather than only hyperscale campuses.
That same power-and-connectivity logic is spilling directly into industrial real estate. Data centers share structural DNA with logistics assets — large floor plates, heavy structural capacity, and proximity to transport and utility infrastructure — and CBRE research cited in recent industry coverage projects overall CRE sales volume rising 15% to 20% in 2026, with infrastructure-adjacent industrial properties outperforming the broader market as manufacturers of transformers, switchgear and battery systems expand near utility corridors.
6. Development Risk and the 2026 Delay Crisis
Demand is not the binding constraint on this sector anymore — delivery is. Sightline Climate's April 2026 research found that between 30% and 50% of the roughly 16 gigawatts of U.S. data center capacity scheduled to come online this year will be delayed or canceled outright, with only about 5 gigawatts of that announced pipeline currently under construction. Eleven gigawatts of announced capacity show no visible construction activity despite typical build timelines of 12 to 18 months. High-profile examples include reports of limited physical progress at large announced campuses, underscoring that even the best-capitalized projects are not immune to the grid and equipment bottleneck.
2026 development risk, at a glance
30–50%
of scheduled 2026 U.S. data center capacity likely delayed or canceled
3–7 yrs
typical grid interconnection queue in major utility territories
2028
the year through which switchgear supply is effectively sold out
Sources: Sightline Climate (April 2026); Hanwha Data Centers; industry equipment lead-time reporting
7. Geographic Redistribution of Demand
Because data centers prioritize power access and land availability over conventional location fundamentals, demand is fanning out toward secondary and rural markets. Latin America led global data center inventory growth at 41.3% year-over-year in the first quarter of 2026, followed by North America at 33%, according to CBRE's Global Data Center Trends report. Within the U.S., markets like Columbus, Indianapolis, Kansas City and Reno are drawing early hyperscaler interest specifically because their grids are not yet capacity-constrained, while Nordic markets continue to attract international operators for their natural cooling efficiency and renewable energy access. The result is a genuinely dual-track market: urban-edge sites for latency-sensitive workloads, and rural or secondary markets for hyperscale campuses that can absorb multi-year development timelines.
8. Environmental and Community Friction Is Now a Financial Risk
Community opposition has moved from a reputational concern to a line item that shows up directly in underwriting. The World Resources Institute found that more than $64 billion in proposed U.S. data center projects were delayed, blocked or abandoned between May 2024 and March 2025 due to organized local opposition — and Data Center Watch separately recorded a 125% surge in opposition activity in a single quarter of 2025. Water has become a particular flashpoint: North American data centers consumed roughly one trillion liters of water in 2025, according to Reuters reporting on investor pressure ahead of 2026 annual meetings, and more than a dozen institutional investors are now pushing Amazon, Microsoft and Google for site-level — rather than aggregate — water and energy disclosure.
Governance gaps are compounding the friction. A review of 31 Virginia municipalities with existing or proposed data centers found that 25, or 80%, had signed non-disclosure agreements limiting what local officials could share publicly about a project's scale and resource needs, per WRI's analysis — a pattern that is increasingly cited in community pushback itself. As of mid-2026, nearly 12,000 data centers were operating across 179 countries, and local resistance is now explicitly listed by CBRE and Colliers as a top-tier development risk alongside power and equipment constraints, not a secondary consideration.
9. Tenant Mix, Ecosystem Effects and Operations Technology
The tenant base anchoring this asset class looks nothing like traditional CRE. Hyperscale technology firms, AI labs and cloud providers now dominate new leasing, bringing long-term commitments, investment-grade credit and enormous capital investment — a combination that improves income stability for owners even as it concentrates specialization risk around a handful of tenant types. Large campuses are also generating measurable spillover: fiber providers, specialized engineering firms and equipment manufacturers cluster around major hubs, creating secondary demand for residential and retail space in surrounding submarkets.
Inside the buildings themselves, the same AI driving demand is also being used to manage it. Digital twins, predictive maintenance platforms and AI-driven building management systems are increasingly standard tools for reducing operating costs and anticipating equipment failure before it disrupts uptime — the single metric hyperscale tenants care about most.
The Market Perspective: What Investment Committees Are Actually Asking
The clearest sign of how far this shift has traveled is the change in the questions being asked at the investment-committee table. The traditional opening question — what is the occupancy rate — has been replaced by a different set entirely: is there confirmed power capacity, can this asset support digital demand, and what is its long-term infrastructure relevance. For developers, that means absorbing a level of technical and regulatory complexity that has no precedent in conventional CRE underwriting. For investors, it means rethinking portfolio construction around infrastructure-style, long-duration cash flows rather than traditional lease-driven income. For communities, it means negotiating a genuine balance between economic development and local resource strain — a negotiation that, as of 2026, is still being worked out project by project rather than through settled national policy.
➡️ Read the related post: Impact of AI Infrastructure Boom on Commercial Markets 2026
In conclusion, AI infrastructure is no longer simply supported by commercial real estate — it is actively redefining it. The market in 2026 is shaped as much by grid interconnection queues, water rights, and gigawatt commitments as by rent rolls and cap rates. This is a structural shift in what the asset class fundamentally is, not a cyclical swing that reverses when financing conditions ease.
Stakeholder Advisory: What to Do With This Data
Practical guidance drawn directly from the trends above, organized by who is reading this and what decision they are likely facing next.
Institutional investors and fund managers
Underwrite power interconnection timelines with the same rigor as tenant credit — the 30% to 50% delay rate for scheduled 2026 capacity means announced pipelines cannot be treated as committed supply. Favor sponsors with an operating track record over newer entrants chasing yield in an overheated segment of the market.
Developers and land owners
Secure utility interconnection studies before marketing a site rather than after — confirmed substation access is now the primary driver of achievable pricing, ahead of zoning or location. Build community engagement and transparent water and energy disclosure into the project timeline from day one rather than treating it as a late-stage hurdle.
Lenders and capital markets participants
Structure underwriting around uptime guarantees and hyperscale contract backlog rather than occupancy alone, and stress-test deals against equipment lead times — transformers and switchgear delays are now a more common cause of default risk than tenant non-renewal.
Industrial and logistics owners
Evaluate underutilized or older distribution assets near substations and utility corridors for data center conversion potential before competitors identify the same opportunity — the overlap between industrial and digital infrastructure site criteria is only intensifying.
Local officials and communities
Request site-level — not aggregate — water and energy disclosure before rezoning, and avoid non-disclosure agreements that limit public visibility into project scale; transparency early in the process has proven to reduce, not increase, the risk of project cancellation later.
Policymakers and grid operators
Prioritize large-load interconnection reform alongside generation interconnection reform — current frameworks like FERC Order 2023 address the latter but leave the former as the more binding constraint on AI infrastructure deployment nationally.
Frequently Asked Questions
Why are data centers now more valuable than office buildings to some investors?
Data centers offer long-duration, infrastructure-style cash flows backed by investment-grade hyperscaler tenants, and demand has proven durable enough that data center construction spending overtook office construction spending in the U.S. for the first time in late 2025.
What is actually limiting data center growth in 2026?
Power, not capital or land. Grid interconnection queues of three to seven years, multi-year transformer lead times, and switchgear shortages through 2028 are causing an estimated 30% to 50% of scheduled 2026 U.S. capacity to be delayed or canceled.
How big a factor is community opposition?
Material. More than $64 billion in proposed U.S. projects were delayed, blocked or abandoned amid local pushback between May 2024 and March 2025, and opposition activity surged 125% in a single quarter of 2025, according to Data Center Watch.
Which markets are attracting the most new data center investment?
Dallas-Fort Worth has edged out Northern Virginia as the top-ranked North American market for 2026 investors, while secondary markets like Columbus, Indianapolis, Kansas City and Reno are gaining early hyperscaler interest specifically because their power grids are less constrained.
Sources
- Colliers — 2026 Data Center Marketplace Report
- Commercial Property Executive — What Hyperscaler Growth Means for Data Center REITs
- CBRE — 2026 North American Data Center Investor Intentions Survey
- CBRE — Global Data Center Trends 2026
- JLL — 2026 Global Data Center Market Outlook
- LandGate — The New Prize in the Data Center Race Isn't Land, It's Land Next to Power
- Hanwha Data Centers — Data Center Grid Limitations: The Power Bottleneck
- Ropes & Gray — Data Center Investment in 2026
- The AI Consulting Network — Half of 2026 U.S. Data Centers Delayed
- World Resources Institute — From Energy Use to Air Quality: How Data Centers Affect U.S. Communities
- TechRadar Pro — Investors Press Hyperscalers on Water and Power Disclosure
- CoStar — Real Estate's New Center of Gravity: Data Centers
- Allwork.Space — Data Centers Overtake Office Construction Spending
- Boston Real Estate Times — Cloud Capital's $6 Billion Data Center Joint Venture
- Core Insights Review — Impact of AI Infrastructure Boom on Commercial Markets 2026
Core Insights Review's editorial team covers commercial real estate, PropTech, smart infrastructure, sustainable construction, industrial real estate, and the technologies shaping the built environment. Check for more information: Core Insights Review. Follow us at: LinkedIn, Facebook and X.
