AI’s Data Center Gold Rush Comes With Real Risk

The surge in data center development has become one of the largest capital stories in commercial real estate, driven by the rapid rise of artificial intelligence. Billions are flowing into new projects, with construction and deal activity accelerating sharply and demand outpacing supply in many major markets. Low vacancy rates and heavy pre-leasing, often years in advance, have reinforced the belief among many investors that AI-driven demand is durable and still in its early innings.

At the same time, there is growing unease about how quickly capital is concentrating in one asset class. Some investors are acquiring land and securing power before lining up operators, reflecting a fear of missing out rather than disciplined underwriting. Others point to the rapid evolution of AI technology itself, warning that computing needs, chip lifecycles, and deployment strategies could shift faster than these facilities can be delivered, potentially leaving certain projects less relevant or misaligned with future demand...

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RSK: Even though there is a rush to build data centers, I do not think the sub-market is saturated yet. As many proposals that are out there, more than half are turned down for various environmental issues, power use and NIMBY's.