Data Centers

Properties leased to Equinix, Digital Realty, and specialized AI computing providers offer investors exposure to mission-critical infrastructure supporting global digital transformation. These facilities demand premium real estate characteristics including redundant power infrastructure, fiber connectivity, climate control systems, and physical security-creating significant barriers to entry and supporting premium valuations. The AI computing boom is accelerating power demand well ahead of the pace of new supply, which supports rents. Data center leases typically run long, often with investment-grade or near-investment-grade tenants and escalations tied to power costs. Cap rates are among the lowest in commercial real estate, which is the scarcity and the credit, not a bargain yield.

1. 1Prioritize properties leased to investment-grade data center operators (Equinix, Digital Realty) with BBB or better credit ratings to ensure financial stability and consistent rent payments.
2. 2Evaluate power infrastructure capacity and redundancy; facilities with multiple utility connections, backup power systems, and fiber connectivity command premium rents and support higher utilization.
3. 3Focus on locations with abundant power infrastructure and favorable utility economics; power availability is the critical constraint limiting data center development and expansion.
4. 4Analyze tenant mix and concentration; facilities with diversified tenant bases (cloud providers, colocation customers, enterprise users) offer lower concentration risk than single-tenant assets.
5. 5Consider lease escalation structures indexed to power costs or CPI; data center rent growth typically exceeds inflation due to rising power costs and supply constraints.
6. 6Monitor AI computing demand acceleration; facilities positioned to serve GPU computing and AI training workloads are experiencing outsized demand and pricing power.