The business of selling power-equipped real estate to data center developers is getting more challenging, one of the top global real estate investment firms told Semafor.
David Steinbach, chief investment officer of Hines, said in an interview in Davos that historically the company never gave a second thought to the grid access potential of a plot of land. That changed in the past few years as hyperscalers became some of the company’s most important clients, and Hines found it could earn tens of millions of dollars preparing “powered land” to sell to them.
Now that strategy is facing headwinds, Steinbach said. Utilities are increasingly reluctant to arrange grid connection deals with middlemen like real estate firms, preferring to deal directly with the tech companies. And the tech companies themselves, after a panic-driven spending spree on data center real estate, are becoming much more conservative about how much they’re willing to spend on it: “Eighteen months ago it felt like the foot was really on the gas, but now it’s come off the gas quite a bit.”