For most of the last decade, data centers were a specialist real estate niche — important, but not something a generalist institutional allocator spent much time on. That's changed. Power availability, not land cost, is now the binding constraint on where the next wave of AI compute gets built, and that has turned utility interconnection queues into one of the more closely guarded pieces of information in commercial real estate.
The new scarcity
Land near population centers is abundant. Land with a fast path to several hundred megawatts of grid capacity is not. Developers are increasingly underwriting sites based on interconnection timelines rather than the usual retail-style location metrics, which has pulled in a wave of capital that has never previously touched industrial real estate.
Where this goes
Expect more capital to chase behind-the-meter power solutions — on-site generation, direct deals with utilities — as a way of skipping the queue entirely. That's a meaningfully different skill set than traditional real estate development, and it's why the sector is pulling in energy investors as much as REITs.