Data centers are no longer a niche asset class—they’re becoming one of the most powerful forces reshaping commercial real estate (CRE) today. What began as a specialized segment of industrial real estate has evolved into a multi-sector disruptor, influencing how investors, developers, and occupiers approach land use, infrastructure, and adaptive reuse.
Demand Surges with AI and Cloud Growth
Artificial intelligence (AI), cloud computing, and streaming platforms are fueling unprecedented demand for data storage and processing power. In the first half of 2025, North America absorbed 2.2 gigawatts (GW) of data center capacity—virtually all of it pre-leased. Top markets like Northern Virginia (647 MW) and Dallas–Fort Worth (575 MW) accounted for roughly 50% of that activity.
Industrial Gets a High-Tech Neighbor
Traditionally, industrial corridors were dominated by warehouses and logistics facilities. Today, they are increasingly home to data centers. Proximity to fiber routes and substations makes many industrial parks ideal for these facilities.
In markets such as Phoenix, Dallas, and Atlanta, land zoned for warehousing or manufacturing is being reevaluated for higher-value data center use.
As of mid-2025, Metro Phoenix ranked second in the U.S. for data center development, with a planned capacity of 4.2 GW—second only to Northern Virginia. Vacancy rates in Phoenix have dropped to approximately 2.3%, reflecting strong demand and limited supply.
Land Becomes a Power Play
Perhaps the most significant shift is in land strategy. Parcels near substations, renewable energy sources, or high-capacity transmission lines are being snapped up quickly. For example:
- In March 2025, Arizona Land Consulting acquired 160 acres in Buckeye, AZ, for $21.7 million to support up to 3.5 million sq. ft. of data center space.
- In August 2024, Tract closed on 2,069 acres in the same area to develop a large-scale data center park.
These transactions underscore both the scale and speed of land demand tied to digital infrastructure.
Office Conversions: Uncommon but Emerging
The national office surplus has sparked a wave of conversion ideas—to multifamily, mixed-use, and even hospitality. Now, data centers are entering the mix. While large-scale conversions remain rare—most office buildings lack sufficient power infrastructure or structural capacity—some suburban campuses with ample grounds and space for backup generators and cooling systems are being considered for adaptive reuse.
It’s still early, but investors and developers are beginning to run the numbers.
Why It Matters for CRE
For owners, investors, and developers, the data center boom is more than just an asset-class trend. It’s a cross-sector force that is:
- Repricing industrial and logistics corridors
- Elevating power access as a key factor in land valuation
- Creating unconventional demand for select office properties
As demand accelerates, data center growth should be viewed not as a standalone vertical, but as a major influence reshaping land use, investment strategies, and asset value across CRE.
