The Rise of ‘Powered Land’: How the AI Boom is Reshaping Real Estate
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The surging demand for data is driving the emergence of a new, highly specialized real estate asset class: “powered land” – property equipped with the robust power infrastructure needed to support massive data centers. This shift is prompting significant investment and a re-evaluation of where and how data centers are developed, with implications for investors and developers alike.
The Data Demand & the Birth of Powered Land
The exponential growth of data consumption is fueling demand not only for traditional data centers but also for facilities designed to house quantum computers and, crucially, the land to support them. Unlike conventional sites, powered land is specifically prepared for data center operations, prioritizing a reliable and sufficient power supply – complete with necessary permits, utility commitments, and infrastructure.
Currently, approximately 20,000 acres globally are occupied by operational data centers. However, a recent research paper from Hines, a global real estate investment manager, estimates that roughly 40,000 acres – nearly 2 billion square feet – will be required to meet projected data center growth over the next five years. To put that in perspective, the needed acreage is comparable to the size of nearly three Manhattans or 1½ times the size of Paris.
From Building Walls to Securing Megawatts
Hines, with over two decades of experience in data center development, has recently pivoted its focus to securing power and entitlements for hyperscale sites. This involves intricate work, including grid mapping, landowner negotiations, and providing financial guarantees to grid operators.
“The challenge isn’t building walls anymore. It’s getting megawatts to the site,” explained a senior official at Hines. “We are focused on this front-end work, making land AI-ready before the buildings even rise.”
This shift has transformed powered land into an investable asset class. Securing power rights is increasingly difficult and valuable, creating a tradeable asset with strong demand from hyperscalers and data center operators. The competition for these sites is now largely driven by tech companies and energy producers, though traditional real estate developers are taking notice.
AI Infrastructure: The “New Oil”
The importance of securing this infrastructure is underscored by recent industry activity. One analyst noted that the recent $5 billion deal between Nvidia and Intel to co-develop chips for data centers and personal computers is more than just a chip deal. “Nvidia’s bet on Intel is a seismic signal that AI infrastructure is the new oil,” they stated.
This sentiment is driving significant investment. In August, Silver Lake, a technology-focused private equity firm, and Commonwealth Asset Management, a real estate and infrastructure investment firm, launched a powered land platform with $400 million in capital. According to a company release, the platform aims to “assemble a global portfolio of strategically located powered land sites to address the key scarce input in meeting the escalating demand for data centers.”
The platform is currently active in the U.S., Canada, and the U.K., regions where power access is becoming increasingly limited. A managing director at Silver Lake emphasized the long-term commitment to meeting the needs of AI-driven data center growth and establishing a leadership position in digital infrastructure. “Our innovative approach to land and power solutions…will enable us to meet the evolving demands of hyperscalers with a holistic, differentiated approach,” they said.
Expanding the Data Center Footprint
Traditional data center hubs, such as northern Virginia, are facing capacity constraints. This is driving expansion into power-rich regions like the Midwest and Texas. Hines’ research also highlights significant opportunities in Europe, where undersupply and growing demand present potential for both developers and investors. The Middle East is emerging as another promising market, fueled by government investment in artificial intelligence, renewable energy, and grid infrastructure.
However, securing powered land is not without its challenges. These include obtaining suitable land, navigating local government entitlement processes, and securing commitments from utility providers.
“This isn’t just a tech story,” a Hines executive concluded. “It’s a building cycle story reshaping how and where the real estate business develops for decades to come.”
