Real Estate Developers: The New Power Brokers

The unrelenting surge in data demand is spawning entirely new commercial real estate frontiers – beyond the traditional data center to specialized categories like “quantum real estate” and, critically, “powered land.”

Quantum real estate refers to facilities specifically engineered to house increasingly powerful quantum computers, which require specialized environmental controls and infrastructure. However, the most immediately impactful shift is the emergence of powered land: tracts of land primed and permitted for data center deployment, where the primary concern is securing reliable and abundant power.

This isn’t just about finding inexpensive land; it’s about guaranteeing access to the substantial electrical capacity required to run modern data centers. This includes securing permits, utility commitments, and building an infrastructure robust enough to handle the demands of a modern data infrastructure.

Currently, operational data centers occupy an estimated 20,000 acres of powered land globally. A recent research report by Hines, a global real estate investment manager, estimates that roughly 40,000 additional acres, encompassing nearly 2 billion square feet, will be necessary to support projected data center growth over the next five years. This staggering figure roughly equates to just under three times the area of Manhattan or one and a half times the size of Paris, highlighting the scale of the impending demand.

Hines, with over two decades of experience in data center development, has strategically pivoted to focus on securing power infrastructure and entitlements for hyperscale data center sites. This involves extensive grid mapping, complex negotiations with landowners, and the provision of robust financial guarantees to grid operators, who increasingly demand assurances due to the massive energy consumption involved. The sheer scale of the data center market and the concentration of cloud providers has led to power companies shifting the risk of data center developments onto the data center operators and land owners.

“The biggest bottleneck is no longer the construction itself; it’s securing the megawatts needed to run the operations,” explains David Steinbach, Hines’ global chief investment officer. “At Hines, we are concentrating on the front-end, ensuring that the land is ‘AI-ready’ even before the first construction crews arrive.”

Steinbach emphasizes that powered land is now emerging as a distinct, investable asset class, where power rights themselves possess substantial value and scarcity. He points out that securing grid connections and obtaining the necessary permits create a tradable asset coveted by both hyperscalers and data center operators.

While traditionally led by real estate developers, the competition for powered land is increasingly driven by technology giants and energy producers, reflecting the critical role of energy security in the digital economy. Hines is positioning itself to capitalize on this shift.

“The savviest investors today are focusing not on building square footage but enabling computation,” Steinbach observes. He cites Silver Lake, a global private equity firm focused on technology investment, along with Commonwealth Asset Management, a real estate and infrastructure investment firm, which are examples of a powered land platform aimed at data center development. It will deploy $400 million of capital “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,” according to a news release.

The platform is currently operating in and targeting high-growth markets across the U.S., Canada and the U.K., where power access is becoming increasingly scarce.

This isn’t merely a real estate play; it’s a bet on the future of compute and the massive infrastructure buildout that will be required to support the continued growth of AI, cloud computing, and other data-intensive applications. The ability to secure guaranteed power is a strategic advantage that translates directly into long-term value for investors.

This shift is also forcing data center hubs to expand beyond already saturated markets like Northern Virginia and into regions abundant with power resources, such as the Midwest and Texas. Hines’ research indicates significant opportunities in Europe, where undersupply and rising demand create a favorable environment for developers and investors. It also highlights the Middle East as a promising emerging market, fueled by substantial government investments in artificial intelligence, renewable energy, and grid infrastructure.

However, investing in powered land comes with its own set of challenges. Securing suitable land, navigating complex entitlement processes with local authorities, and coordinating with utility providers to obtain firm power commitments all require considerable expertise and resources.

“This isn’t simply a tech story; it is a fundamental reshaping of the real estate landscape that will have long-lasting implications for how and where development takes place for decades to come,” concludes Steinbach. To succeed, data center developers and investors will need to possess a deep understanding of both the energy sector and the evolving technological demands of the digital age.