Finding Gold in Land in the Data Center Gold Rush
Finding Land Gold: How to Identify and Invest in Properties for Data Center Development
The booming data center market presents a compelling opportunity for savvy land investors. With supply in primary data center markets increasing by 34% year-over-year to 6,922.6 megawatts and vacancy rates at a record-low 1.9%, developers are in a constant search for suitable land
. This newsletter will guide you through identifying, acquiring, and positioning land parcels that could become highly valuable to data center developers in this high-demand market.
The Data Center Gold Rush: Why Now Is the Time
The global data center market is forecasted to expand at a 15% compound annual growth rate through 2027, with potential to reach 20% growth
. This surge is fueled by artificial intelligence, cloud computing, and digital transformation initiatives. The rental rates for data centers have increased by 12.6% year-over-year, reaching $184.06 per kilowatt for mid-sized installations
.
With data center developers regularly requesting 1 gigawatt of power or more for new AI-focused facilities (equivalent to powering 800,000 U.S. homes), the hunt for suitable land has never been more competitive
. This creates a prime opportunity for investors who can identify and secure properties with the right characteristics.
What Data Center Developers Are Looking For
To identify land with potential for data center development, you need to understand what developers prioritize:
Power: The New Gold Standard
Power availability has become the single most critical factor in site selection. Developers look for:
Access to robust and reliable power grids
Potential for 100-300+ megawatts of capacity
Proximity to power substations
Ability to secure redundant power sources
Preferably areas with renewable energy options
The bottom line: without significant power capacity, even the best-located land will be overlooked.
Location Considerations
While power is paramount, location still matters:
Proximity to fiber optic infrastructure and internet exchange points
Geographical stability with low risk of natural disasters
Cooler climates that reduce cooling costs
Highway accessibility and proximity to airports
Reasonable distance to urban centers for workforce access
Physical Requirements
Data center developers typically seek:
Parcels of 10+ acres, with hyperscale facilities often requiring 100+ acres
Flat, buildable land with appropriate soil conditions
Room for expansion (future-proofing their investment)
Access to water for cooling systems
Proper zoning or potential for rezoning to data center use
Hot Markets: Where to Focus Your Search
While Northern Virginia has traditionally dominated the data center landscape, several markets are experiencing significant growth:
Primary Markets with Strong Demand
Atlanta: Led all primary markets for absorption in 2024 with 705.8 MW, surpassing Northern Virginia for the first time
Dallas-Fort Worth: Emerging as an "epicenter" for data center developers with significant investment
Northern Virginia: Still a powerhouse despite power constraints
Chicago: Continuing strong demand with development expanding beyond urban cores
Silicon Valley: Premium pricing with limited land availability
Emerging Markets Worth Consideration
Charlotte, Northern Louisiana, and Indiana: Seeing significant investment due to tax incentives, available land, and power accessibility
Texas: Receiving "billions in development dollars" with Governor Abbott actively promoting foreign investment
Secondary markets with power availability and favorable tax policies are increasingly attractive as primary markets face constraints
Finding Potential Properties: Tools and Resources
Data and Property Platforms
County GIS systems: Most parcel data is maintained at the county level and can often be accessed through county GIS sites
LandWatch.com: With over 721,712 land listings, this platform specializes in land properties
Lightboxre.com: Offers nationwide US and Canadian parcel data through their developer platform
CoreLogic, ATTOM, and Regrid: Data aggregators selling access to property information
Auction.com: Platform for foreclosure and bank-owned properties that might be available at attractive prices
Strategic Research Approach
Identify areas with electricity substations and significant power capacity
Research counties with favorable data center zoning or incentives
Look for industrial zones near fiber routes with underdeveloped land
Consider repurposing opportunities like former manufacturing sites with existing power infrastructure
Evaluating Your Land's Data Center Potential
Once you've identified potential properties, evaluate them against these key criteria:
Power Assessment
Contact local utility companies to determine:
Available capacity at nearby substations
Potential timeline and cost for additional capacity
Redundancy options
Connectivity Analysis
Research proximity to:
Major fiber routes (data gravity will guide site selection)
Internet exchange points
Cloud on-ramps
Risk Evaluation
Assess natural disaster risks:
Flood plains
Seismic activity
Severe weather patterns
Evaluate climate factors that affect cooling requirements
Regulatory Review
Understand current zoning and potential for data center use
Research tax incentives for data centers in the area
Investigate environmental regulations that might impact development
Marketing Your Land to Data Center Developers
Once you've secured promising land, here's how to position it for data center developers:
Create a Compelling Value Proposition
Emphasize power capacity potential and substation access
Highlight fiber connectivity options
Detail available acreage and expansion potential
Showcase transportation infrastructure
Target the Right Buyers
Hyperscalers: Companies like Microsoft, Amazon, and Google building massive facilities
Colocation providers: Companies offering shared data center space
Data center brokers: Specialized real estate professionals who represent developers
Investment REITs: Real estate investment trusts focused on data center properties
Professional Presentation
Develop professional marketing materials with technical specifications
Consider partnering with specialized data center brokers
Prepare detailed information on power, connectivity, and regulatory approvals
Case Study: Texas Data Center Land
The Dallas-Fort Worth area illustrates the opportunity perfectly. As noted by one broker: "Billions of development dollars are heading to Texas, creating an urgent need for land investors to secure data center land now. Many developers are still completing Northern Virginia data centers and haven't shifted focus to Texas yet. But the market has gotten saturated and they are being forced to Texas. Act quickly before the rush intensifies."
Sites in this region with strategic infrastructure are selling for premium prices, especially those with "shovel-ready" status and significant power capacity potential.
Your Action Plan
The data center land rush represents a significant opportunity for investors who understand what developers need and can position themselves accordingly. Here's your action plan:
Focus on areas with ample power capacity and growth potential
Leverage property databases and local connections to identify suitable land
Conduct thorough due diligence on power, connectivity, and zoning
Create professional marketing materials highlighting the specific advantages for data centers
Network with data center brokers and developers to understand evolving needs
Remember that power has become the most critical factor in site selection. Land with access to significant, reliable power capacity-even in secondary markets-may be more valuable than properties in primary markets with limited power availability.
In our next newsletter, we'll explore the specific tax incentives different states are offering to attract data center development and how these can dramatically increase your land's value to potential buyers.