{"id":4154,"date":"2026-04-07T11:46:27","date_gmt":"2026-04-07T08:46:27","guid":{"rendered":"https:\/\/gulfdca.com\/?p=4154"},"modified":"2026-04-07T11:51:27","modified_gmt":"2026-04-07T08:51:27","slug":"from-real-estate-to-power-strategy-how-ai-is-reframing-data-centre-development","status":"publish","type":"post","link":"https:\/\/gulfdca.com\/en\/from-real-estate-to-power-strategy-how-ai-is-reframing-data-centre-development\/","title":{"rendered":"From Real Estate to Power Strategy: How AI Is Reframing Data Centre Development"},"content":{"rendered":"<div class=\"img has-hover x md-x lg-x y md-y lg-y\" id=\"image_458127102\">\n\t\t\t\t\t\t\t\t<div class=\"img-inner dark\" >\n\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1020\" height=\"574\" src=\"https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one-1024x576.png\" class=\"attachment-large size-large\" alt=\"\" srcset=\"https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one-1024x576.png 1024w, https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one-300x169.png 300w, https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one-768x432.png 768w, https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one-1536x864.png 1536w, https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one-510x287.png 510w, https:\/\/gulfdca.com\/wp-content\/uploads\/2026\/04\/one.png 1671w\" sizes=\"auto, (max-width: 1020px) 100vw, 1020px\" \/>\t\t\t\t\t\t\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\n<style>\n#image_458127102 {\n  width: 100%;\n}\n<\/style>\n\t<\/div>\n\t\n\t<div id=\"gap-1276811976\" class=\"gap-element clearfix\" style=\"display:block; height:auto;\">\n\t\t\n<style>\n#gap-1276811976 {\n  padding-top: 30px;\n}\n<\/style>\n\t<\/div>\n\t\n<p><u>\u00a0<\/u><\/p>\n<div class=\"elementToProof\">\n<p style=\"font-weight: 400;\"><strong>From Real Estate to Power Strategy: How AI Is Reframing Data Centre Development<\/strong><\/p>\n<p style=\"font-weight: 400;\">As AI accelerates the next wave of digital infrastructure demand, the data centre sector is moving beyond its traditional real estate framing and further into the realm of infrastructure and power strategy. Recent industry commentary, including Colliers\u2019 2026 <em>Data Center Marketplace<\/em> report, reflects this broader shift, highlighting how access to power, utility coordination, and execution capability are becoming increasingly central to market competitiveness.<\/p>\n<p style=\"font-weight: 400;\">A defining theme of the current data centre market is the extent to which AI is pushing the sector beyond traditional real estate logic and further into the realm of infrastructure and power strategy. Increasingly, market competitiveness is being shaped not simply by land or location, but by access to power, utility engagement, and the ability to deliver commissioned capacity on schedule.<\/p>\n<ol>\n<li style=\"font-weight: 400;\"><strong> Data centres are moving beyond traditional real estate and becoming power-led infrastructure<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">At the heart of the current market is a structural shift in how data centres are understood and delivered. Colliers argues that what was once primarily a specialist real estate product has now evolved into a far more complex, power-first infrastructure play. In its framing, 2025 marked the point at which data centre development \u201cceased being a pure real estate discipline and became inseparable from energy infrastructure.\u201d That observation is significant because it captures the extent to which project viability is now being determined less by conventional property fundamentals and more by power availability, utility coordination, and infrastructure execution.<\/p>\n<p style=\"font-weight: 400;\">This is also reflected in the wider economic scale of the sector. The report notes that investment tied to AI and data centre infrastructure represented roughly 4% of US GDP in early 2025, while accounting for the majority of GDP growth. In other words, this is no longer a niche real estate segment. It is increasingly behaving like a foundational infrastructure layer tied to national digital capacity and economic competitiveness.<\/p>\n<ol start=\"2\">\n<li style=\"font-weight: 400;\"><strong> AI is not simply driving more demand &#8211; it is changing the form of demand itself<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">A second major theme is that AI is not just accelerating absorption in the traditional sense. It is reshaping what the market now needs to deliver. Larger campuses, denser compute environments, more sophisticated cooling requirements, and more urgent energisation timelines are all becoming standard features of new development. Colliers points to a market in which average project size increased by 40% in 2025, while North America absorbed 15.6GW over the year, double the 2024 total. It also notes that over 90% of new capacity was pre-leased before completion, underlining the degree to which demand continues to outrun deliverable supply.<\/p>\n<p style=\"font-weight: 400;\">The report also makes clear that demand remains highly concentrated. Hyperscale leasing accounted for more than 70% of 2025 absorption, reinforcing the idea that a relatively small group of very large occupiers continue to shape development priorities across the sector. This matters because hyperscale and AI tenants are not simply taking available capacity; they are increasingly influencing how sites are designed, how power is procured, and how quickly projects need to be delivered.<\/p>\n<ol start=\"3\">\n<li style=\"font-weight: 400;\"><strong> Power has become the binding constraint<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">Perhaps the clearest conclusion running through the report, and in previous GDCA research blongs, is that the market\u2019s primary bottleneck is now power. The challenge is no longer just finding land or raising capital. It is securing electricity on acceptable timelines, managing interconnection risk, and protecting allocations through utility processes that are becoming more expensive and more complex. The report is explicit that power-ready infrastructure now plays a central role in determining both feasibility and returns.<\/p>\n<p style=\"font-weight: 400;\">One of the strongest statistics in the report relates to utility deposits. In several primary markets, utilities now require $25Mn to $75Mn in upfront deposits per project, often non-refundable until energisation. This materially raises early-stage capital exposure and reinforces the extent to which power certainty is now the key differentiator between projects that are theoretically viable and those that are genuinely financeable and deliverable.<\/p>\n<p style=\"font-weight: 400;\">In practice, the most attractive sites are no longer simply those in well-established markets, but those that can secure and retain power on the occupier\u2019s timeline. Deliverable megawatts are becoming more valuable than nominal pipeline.<\/p>\n<ol start=\"4\">\n<li style=\"font-weight: 400;\"><strong> The capital stack is evolving to absorb earlier and greater risk<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">Colliers also highlights a major shift in the way projects are financed. Private credit, it argues, now provides roughly 60% &#8211; 75% of pre-development capital, concentrating exposure to powered land acquisition and early-stage infrastructure risk within private markets. More broadly, the report notes that private credit is expected to supply more than half of the $1.5 Tn in global data centre funding required through 2028, while data centre-related debt issuance reached roughly $170Bn in 2025, up 57% year-on-year.<\/p>\n<p style=\"font-weight: 400;\">This is a notable development because it shows how much capital must now be committed before revenue-generating operations begin. Developers are being asked to absorb longer lead times, utility milestones, larger deposits, and more complex procurement cycles. As a result, balance sheet strength, capital access, and financing sophistication are becoming competitive advantages in their own right. The growth story remains powerful, but it is increasingly front-loaded in terms of risk.<\/p>\n<ol start=\"5\">\n<li style=\"font-weight: 400;\"><strong> Pricing and underwriting are becoming more infrastructure-like<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">Another useful insight in the report is that the sector\u2019s pricing model is changing. New hyperscale and build-to-suit developments are now increasingly underwritten on a <strong>yield-on-cost<\/strong> basis rather than through conventional rate-led escalation. Colliers states that market yields generally range from 7% &#8211; 10%, reflecting a more infrastructure-style approach in which returns are driven by capital intensity, power readiness, and long-duration tenancy rather than by short-term rent discovery alone.<\/p>\n<p style=\"font-weight: 400;\">Meanwhile, existing facilities and multi-tenant colocation capacity continue to be priced on a $\/kW\/month basis. In primary markets, pricing generally ranges from $160 &#8211; $200 per kW per month, net of electrical costs, while secondary markets tend to trade at a 10% &#8211; 15% discount. Even here, however, pricing is increasingly shaped by scarcity, deliverable power, and execution certainty, rather than by product category alone.<\/p>\n<ol start=\"6\">\n<li style=\"font-weight: 400;\"><strong> Strong demand does not remove cost pressure<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">Although the market remains highly favourable from a demand perspective, the report is careful not to frame this as a frictionless boom. Cost inflation remains a defining headwind. Colliers notes that total build costs climbed by more than 45% in 2025, while lead times for critical electrical infrastructure such as switchgear and transformers now frequently exceed 18 months. At the same time, power infrastructure has become the dominant cost driver in new development, accounting for approximately 40% \u2013 50% of total project costs.<\/p>\n<p style=\"font-weight: 400;\">This is a crucial point. Strong leasing conditions do not automatically translate into proportionally stronger returns. Capital is being consumed earlier, timelines are extending, and power-related infrastructure is taking a larger share of project budgets. In effect, the sector is benefiting from scarcity pricing while also absorbing scarcity costs.<\/p>\n<ol start=\"7\">\n<li style=\"font-weight: 400;\"><strong> Natural gas and nuclear are moving into the mainstream power conversation<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">The report also reflects the extent to which alternative power strategies are becoming more central to project delivery. Natural gas is described as the most common offset to traditional utility supply where grid timelines cannot meet hyperscale and AI deployment schedules. In this sense, behind-the-meter or proximate generation is no longer a fringe solution; it is increasingly becoming a practical bridge strategy in constrained markets.<\/p>\n<p style=\"font-weight: 400;\">Alongside this, long-duration power procurement is evolving as hyperscalers pursue more durable energy arrangements. The report notes that major technology firms have committed more than $10Bn to SMR partnerships, creating what it describes as a new investment class within digital infrastructure. While these arrangements still carry substantial execution and regulatory risk, their growing prominence shows how seriously the industry is now treating power procurement as a strategic differentiator.<\/p>\n<ol start=\"8\">\n<li style=\"font-weight: 400;\"><strong> Community opposition is becoming a more material development risk<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">A further theme, and one that is becoming harder to ignore, is the rise of community resistance. Colliers points to growing local pushback against the scale and resource intensity of AI-linked data centre development, particularly around electricity demand, water use, noise, diesel emissions, and land-use concerns. The report cites figures showing that more than $64Bn in US data centre projects have been blocked or delayed since 2023, including $18Bn cancelled outright and $46Bn postponed.<\/p>\n<p style=\"font-weight: 400;\">This matters because it suggests that market risk is no longer defined solely by engineering, finance, or tenant demand. Political and community acceptance are becoming increasingly relevant to delivery timelines and site selection. As campus sizes grow and infrastructure footprints become more visible, local resistance is emerging as a more organised and meaningful constraint on development.<\/p>\n<ol start=\"9\">\n<li style=\"font-weight: 400;\"><strong> Execution capability is becoming the defining competitive advantage<\/strong><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\">Taken together, the broader message is that the data centre sector is becoming more infrastructure-like in both its operating model and its investment logic. The premium is shifting away from theoretical market positioning and toward the practical ability to finance, power, permit, and energise projects on schedule. That is what gives this commentary wider relevance. Although much of the supporting evidence is drawn from the US market, the underlying themes are transferable across global digital infrastructure markets: AI is raising the importance of power, compressing timelines, increasing capital intensity, and forcing a more integrated relationship between digital infrastructure and energy infrastructure.<\/p>\n<p style=\"font-weight: 400;\">In that sense, the strongest performers in the next phase of the market are unlikely to be those with the largest land banks or the broadest pipelines alone. They will be those with the ability to convert planned capacity into commissioned megawatts with the greatest degree of certainty. Increasingly, that is where competitive advantage lies.<\/p>\n<p style=\"font-weight: 400;\"><strong>\u00a0<\/strong><\/p>\n<p style=\"font-weight: 400;\">Viewed in this context, the current cycle is not simply about faster growth in data centre demand. It is about a deeper restructuring of how the sector operates. AI is intensifying power requirements, accelerating delivery expectations, and increasing the strategic importance of utility engagement, capital formation, and energy planning. The implication is that the sector is moving further away from a conventional real estate model and closer to an infrastructure framework in which power certainty and execution capability are the defining measures of value. For developers, investors, and policymakers alike, that may prove to be one of the most important shifts shaping the market today.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>\u00a0 From Real Estate to Power Strategy: How AI Is Reframing Data Centre Development As AI accelerates the next wave of digital infrastructure demand, the data centre sector is moving beyond its traditional real estate framing and further into the realm of infrastructure and power strategy. Recent industry commentary, including Colliers\u2019 2026 Data Center Marketplace<\/p>\n","protected":false},"author":1,"featured_media":4160,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"class_list":["post-4154","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/posts\/4154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/comments?post=4154"}],"version-history":[{"count":3,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/posts\/4154\/revisions"}],"predecessor-version":[{"id":4162,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/posts\/4154\/revisions\/4162"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/media\/4160"}],"wp:attachment":[{"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/media?parent=4154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/categories?post=4154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gulfdca.com\/en\/wp-json\/wp\/v2\/tags?post=4154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}