Data center power draw climbs from 40 megawatts to gigawatts, forum panelists say

Data centers built as recently as seven years ago drew 30 or 40 megawatts; the ones being underwritten now call for one or two gigawatts. Sam Stockdale, managing director of power and infrastructure at Link Logistics, put that gap in front of the first panel of Commercial Observer's Data Centers Development and Infrastructure Forum on Oct. 6. A gigawatt-scale campus, he said, commands "a completely different scale of investment to achieve development."

The larger facility draws roughly 25 to 65 times the power of the older generation. If power is what scales, the interconnection and generation behind a site — not the building envelope — is what sizes the equity check and construction debt. The unit of underwriting is migrating from square feet to megawatts.

Jeffrey Moerdler of Haynes Boone pointed the next wave of development at urban and suburban inference data centers, not the rural campuses of the first build-out. Those are low-latency facilities built to deliver AI outputs to users in dense cities. "In the last year or so, I've seen my clients that have those kinds of facilities at capacity sell out the [computing] capacity faster to smaller users that need the end point of their AI network to be local," he said. If that holds, the land bid tilts back toward metros, where sites already carry pricing of other uses.

Moerdler reserved his skepticism for neoclouds, specialized on-demand cloud networks for AI models that lease space rather than own it. "Neoclouds are new companies, there are a zillion of them popping up everyday, they have a zero credit rating, and they usually have someone with a very deep pocket backing them," he said. "I worry about whether this is WeWork 2.0." Denver's office market has not resolved that comparison quickly: a 107,000-square-foot former WeWork there is on the market without an asking price and with a $40 million cost basis, as this publication has reported.

Moerdler opened his presentation by calling data centers "the fourth and maybe the fifth industrial revolution," grouping them with earlier power shifts. Participants also discussed how public opinion has made data centers a hot topic on Capitol Hill and in statehouses, pushing siting and entitlement onto a political calendar next to construction.

Link Logistics, where Stockdale works, has been selling into a market this publication described as split between the income bid for fully leased boxes and the development bid for land. Per PRED's records, the firm closed a $57 million sale of a seven-building, 97 percent leased Fort Lauderdale campus on Oct. 5.

The two asset classes are competing for the same ground. This publication's review of five industrial trades found pricing separating by building function — Amazon's $195 million Chicago purchase, a half-leased flex building outside Boston near $93 a square foot — and a data center mandate that wants infill acreage would add another screen to that sorting.