The Real Value of Data Centers Explained
Explore the vital role of data centers in modern infrastructure and their impact on clean energy growth.
When Scott Millar, president of a development corporation, first started discussing bringing a data center to his region, he ran into a wall of confusion. "Many people assumed 'data center' meant a telemarketing operation," he recalled. That confusion — between a room full of headset-wearing cold-callers and a facility that quietly powers global commerce, healthcare systems, and energy grids — highlights how poorly understood these assets remain, even as demand for them explodes.
That gap between perception and reality has real consequences. Developers pass on deals they shouldn't. Municipalities reject projects that could transform their tax base. Landowners sit on parcels perfectly suited for development without knowing it. Understanding what data centers actually are — and what they're worth — is no longer optional for anyone serious about infrastructure investment.
What a Data Center Actually Is (And Isn't)
Strip away the jargon, and a data center is a building engineered to house servers, networking equipment, and storage systems at scale. The facility manages power, cooling, and connectivity with an obsessive precision that most industrial facilities never approach. Redundant power feeds, backup generators, precision HVAC systems, and fiber connectivity — the physical infrastructure alone represents years of engineering refinement.
The misconception that data centers are glorified office buildings dies the moment you look at the power requirements. A single hyperscale facility can draw 100 megawatts or more — enough electricity to power roughly 80,000 homes. That's not an IT project. That's a major utility load, reshaping how grid operators, utilities, and transmission planners think about regional power infrastructure.
The "telemarketing operation" assumption Millar described isn't just outdated — it reflects a broader failure to grasp how physical and digital infrastructure have converged. Every financial transaction, every streamed video, every AI inference query runs through hardware that lives somewhere. That somewhere is a data center, which needs land, power, water, and fiber to function.
Data Centers as Infrastructure — Not Just Real Estate
The infrastructure sector has been slow to fully internalize what data centers represent in the broader built environment. They aren't just another asset class sitting alongside industrial warehouses and logistics parks. They're active participants in the infrastructure stack that modern cities and regions depend on.
Consider smart city development. Traffic management systems, utility grid sensors, autonomous vehicle networks, and municipal surveillance platforms all generate and process enormous data volumes in near-real-time. That processing doesn't happen in the cloud abstractly — it occurs in physical facilities, often located close to population centers to minimize latency. Edge data centers, smaller facilities positioned closer to end users, are becoming embedded in urban development the same way substations and fiber conduits once were.
For urban planners and developers, ignoring data center siting considerations is increasingly like ignoring transit access — it shapes what's possible on a piece of land. Regions with high-density fiber routes, robust power infrastructure, and available land near major population centers have become magnets for data center development, which in turn attracts the tech companies, financial firms, and healthcare operators that run their workloads there.
The property tax implications alone deserve serious attention. A utility-scale data center can generate millions of dollars annually in local tax revenue while employing relatively few workers — which means minimal demand on schools, emergency services, and social infrastructure compared to a residential development of equivalent assessed value. For cash-strapped municipalities, that math is compelling.
The Energy Question Is More Nuanced Than the Headlines Suggest
Data centers have a complicated relationship with clean energy, and it's worth getting that relationship right rather than defaulting to either boosterism or alarm.
The consumption side is real and significant. Data centers globally consume somewhere between 1% and 2% of total electricity production, and that share is rising as AI workloads — which are dramatically more compute-intensive than traditional applications — scale up. A single large language model training run can consume as much electricity as hundreds of homes use in a year. These are not trivial numbers, and anyone claiming otherwise is selling something.
But the efficiency trajectory is genuinely impressive. Power Usage Effectiveness (PUE), the standard metric for data center energy efficiency, has dropped steadily over the past decade. Hyperscale operators like Google and Microsoft routinely report PUE figures approaching 1.1 — meaning only about 10% of total power consumption goes to overhead like cooling and lighting rather than actual computing. Legacy enterprise data centers often run at PUEs of 1.5 to 2.0, which explains why consolidation into hyperscale facilities can actually reduce total energy consumption even as raw compute capacity grows.
The more interesting story is that data centers are becoming anchor customers for renewable energy projects in ways that actually accelerate clean energy infrastructure build-out. When a major operator signs a 15-year power purchase agreement for output from a wind or solar farm, they're providing the revenue certainty that makes financing that project possible. Data center demand has been a meaningful catalyst for renewable development in markets from Virginia to West Texas to the Nordics.
The cooling innovation front is equally active. Liquid cooling, immersion cooling, and facility designs that leverage ambient outside air are reducing the water and energy overhead that traditional HVAC-based cooling required. Some facilities in colder climates run essentially without mechanical cooling for significant portions of the year — a dramatic departure from the energy-intensive cooling loops that defined earlier generations of data centers.
Where Data Center Development Is Heading
The hyperscale era isn't over, but it's maturing. The next wave of development looks different in important ways.
AI infrastructure is driving a hardware cycle unlike anything the industry has seen. GPU clusters for AI training require not just more power but more power density — more watts per square foot than traditional server deployments. That's forcing facility design to evolve rapidly, with higher-capacity power distribution, more aggressive cooling, and structural reinforcements to handle the weight of dense hardware configurations. Sites that were adequate for conventional cloud workloads may not meet the specs for AI-optimized deployments.
Geographic diversification is accelerating. For years, data center development concentrated in a handful of markets: Northern Virginia, Silicon Valley, Dallas, Chicago, Phoenix, and Atlanta. Those markets are now supply-constrained — power availability in Northern Virginia, historically the world's largest data center market, has become a genuine bottleneck. Developers and operators are actively scouting secondary markets where land is available, power infrastructure can be expanded, and regulatory environments are welcoming.
That search for secondary markets is creating opportunities that didn't exist five years ago. Regions with underutilized transmission capacity, available industrial land, and favorable tax structures are seeing serious interest from developers who would have overlooked them previously. For landowners and local governments in these emerging markets, the window to shape how that development happens — rather than simply reacting to it — is open right now.
Sustainability is shifting from marketing language to procurement requirement. Hyperscale operators have made ambitious commitments: Microsoft's carbon-negative pledge, Google's 24/7 carbon-free energy goal, Amazon's net-zero by 2040. Meeting those commitments requires that new facilities be sited where renewable energy is genuinely accessible and that supply chains for construction and hardware meet evolving standards. Developers who can credibly deliver on sustainability criteria have a meaningful competitive advantage in the current market.
What This Means for Infrastructure Investors and Developers
The question worth sitting with isn't whether data centers matter to the infrastructure sector — that's settled. The question is whether the developers, landowners, and capital allocators reading this are positioned to participate in the build-out intelligently.
That means understanding land characteristics that make a parcel data center-viable: proximity to fiber routes, distance to high-voltage transmission, water availability for cooling, zoning flexibility, and soil conditions for foundation loads. It means understanding the difference between a colocation facility, a hyperscale campus, and an edge deployment — because the site requirements, capital structures, and tenant profiles are meaningfully different.
And it means resisting the instinct to categorize data centers as somebody else's business — the province of tech companies and specialized REITs. The infrastructure, land, power, and connectivity those facilities require are exactly the domains that infrastructure developers, clean energy developers, and land specialists work in every day.
Scott Millar was right to push past the misconceptions his community held. The developers and investors who make the same effort now — before the obvious plays are picked over — are the ones who will look prescient in ten years.
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