Over the past year, I have become increasingly bullish on the long-term opportunity in data centers.
Artificial intelligence is accelerating a trend that was already well underway because of cloud computing and the continued growth in data consumption. The amount of capital that will need to be invested into the physical infrastructure supporting all of this is enormous.
McKinsey estimates that global data center expenditures could reach roughly $7 trillion through 2030. The five largest hyperscalers alone are expected to spend hundreds of billions of dollars annually on infrastructure, and despite all of this investment, new supply remains heavily constrained by access to power, land, permitting, equipment, and skilled labor.
This is resulting in near-0% vacancy rates in many of the most important markets and rapidly growing rents. They have more than doubled over the past five years:
We have discussed this opportunity quite a bit recently, but I realized that we haven’t really stepped back to look at what this means for our portfolios as a whole.
Our data center portfolio is slowly taking shape.
We now have three major investments that give us exposure to this theme from very different angles:
