Data centers in demand – is your land a perfect fit?

Industrial land owners are hearing a lot about the potential of data centers right now—with good reason. The rapid proliferation of artificial intelligence (AI), spatial technologies and other digital innovations is poised to revolutionize the global electricity market. As these technologies continue to advance, energy demand is expected to double by 2026 and triple by 2030, posing significant challenges for both power supply and data infrastructure.

As a landowner, now could be the perfect time to explore any possibility to capitalize on these trends. But you might also be wondering:

What exactly goes into a data center?
How do I know if my vacant land is even a good fit?
If my land is a fit, who should I partner with to build one?

Let’s get into the vital data.

Key components of a data center

Power infrastructure components:

Utility Power / Primary Generation – This is the main source of electricity supplied by the local power grid.
ATS (Automatic Transfer Switch) – Automatically switches power from the utility to backup generators during an outage.
Switchgear / Transformers – Electrical distribution equipment that manages, protects, and steps down voltage before delivering power to data center systems.
Backup Generators – Diesel or natural gas-powered generators that supply electricity when utility power fails.
UPS (Uninterruptible Power Supply) – Provides instant backup power via batteries or flywheels to protect critical loads before generators take over.
PDU (Power Distribution Unit) – Distributes power from the UPS to racks, servers, and IT equipment.

Critical IT load:

Servers – Process and store data for applications, cloud services, and computing workloads.
Storage systems – Hard drives, SSDs, or storage arrays that retain data for computing and backup purposes.
Networking equipment – Includes switches, routers, and firewalls to manage data traffic within and outside the data center.

Water-based and evaporative cooling systems:

CRAH (Computer Room Air Handler) – Uses chilled water to cool and circulate air inside the data center.
Chiller plants – Large cooling systems that produce chilled water to support CRAH units.
Coolant pumps – Move chilled coolants between chiller plants and CRAH units to maintain proper temperatures. In some cases, may be to IT equipment in direct-to-chip cooling methods.
Air-cooled chiller systems – Use little to no water due to being sealed in a closed loop.

Non-essential functions:

Lighting – General building lighting, typically not UPS-backed unless emergency-specific.
HVAC (Heating, Ventilation, and Air Conditioning) – Maintains airflow and humidity but is usually not backed by UPS.
Auxiliary power – Non-critical power used for office spaces, administrative areas, and general facility operations.

FACT OR FICTION?

Data centers will only ever be a massive drain on the local water supply.

Fiction! Cool fact: Data centers have so much potential to evolve in their cooling methods, using less water over time. Newer facilities have begun implementing more air-cooled and closed-loop systems or other alternative liquid coolants to improve efficiency while reducing or eliminating need for excessive water infrastructure.

How do I know if my vacant industrial land could be perfect for data center development?

While the full list of criteria can get long, there are two characteristics that will best determine viability: access to power and access to a fiber network. Those will often be the first two traits any development partner will want to confirm before moving forward. Other key considerations?

Air quality
Access to water
Elevation
Zoning
Topography

With so many variables, partnering with the right experts – those who can help you every step of the way through the consideration set – is extra important. Those advisors, like our team here at Avison Young, are able to make all of the necessary connections to the tests, tools, and people who will make sure your land is evaluated and valued correctly.

FACT OR FICTION?

Data centers benefit their communities in many ways.

This is true! Local boon: In addition to high-paying job creation, data centers also generate substantial tax revenue, and their presence often leads to infrastructure upgrades that benefit residents at no cost to them.

My land appears to be a prime data center location. Who could I partner with to develop it?

It’s important to understand the different players in the ecosystem and their specific needs and motivations. Here are just a few of the types of individuals you could come across in your journey to build a data center:

Hyperscalers
These are large companies like Amazon (AWS), Microsoft, and Google that require significant data center capacity to support their cloud services.
Data center developers
These are companies that specialize in building and operating data centers, often leasing space to other businesses. Examples might include companies like Digital Realty and Equinix.
Colocation providers
These companies offer shared data center space where multiple businesses can rent space for their servers and IT infrastructure. They provide the physical space, power, cooling, and security.
Horizontal construction companies
These are companies involved in the initial stages of data center development, such as site preparation and infrastructure setup.

What else should I keep in mind as I embark on data center development?

Just as the industry is rapidly growing, it’s also rapidly iterating and evolving. Keep an eye on forward-looking trends, like movements toward self-generation (when electricity is generated on-site, providing independence from energy networks), which can impact both needs and viability of land assets to support data center development in the long-term.

The landscape, current and as it changes, as well the types of provider and partnership options that exist within industry and community, will make every difference. Watch nationally, but always think locally with regard to what’s possible and partner with those that understand your market best.