Headlines warn that “data centers could consume more electricity than entire countries” and that “Google’s power use grew 27% in just one year.” For commercial real estate (CRE) professionals, the question is whether this signals an energy crisis or an investment opportunity. In reality, it is both. 

How Big Is This Really? 

The International Energy Agency (IEA) reports that data centers consume about 415 terawatt hours (TWh) of electricity annually, or roughly 1.5 percent of global demand. While that may not sound overwhelming, consumption has grown 12 percent annually for the past five years and could more than double to 945 TWh by 2030. 

In the United States, the Energy Information Administration (EIA) projects that by 2050, data centers could require 7 percent of all commercial floorspace and account for 20 percent of electricity consumption, up from 8 percent in 2024. That would make computing the single largest energy use in commercial real estate, surpassing lighting, HVAC, and other categories combined. 

Visual Capitalist estimates that by 2030, U.S. data center energy demand could rival the entire national consumption of Poland. 

Electricity as the New Limiting Factor 

For decades, real estate development was most constrained by land availability, zoning, and financing. Today, the leading factor is power. CBRE reports that power shortages are now the top cause of construction delays. Cushman & Wakefield adds that land prices for large parcels rose 23 percent in 2024, and developers are buying bigger tracts of land, averaging 224 acres, simply to secure enough power. 

Nowhere is this clearer than in Loudoun County, Virginia. Known as “Data Center Alley,” it has nearly 6,000 megawatts of active capacity with another 6,300 megawatts planned. This is more electrical capacity than some entire states. 

Costs, Returns, and Leasing 

Data centers are among the most expensive projects in commercial real estate. They typically cost $600 to $1,100 per square foot, or $7 to $12 million per megawatt of IT capacity. A 60-megawatt facility in Northern Virginia could require between $420 million and $770 million to construct. 

Despite these costs, returns have been strong. CBRE reports that average asking rents rose 20 to 54 percent in just eight months, while vacancies in primary markets fell to a record 1.9 percent. Unlike traditional commercial properties, leases are structured around power capacity, measured in kilowatts or megawatts, rather than square footage. Space is also pre-leased far in advance, often years ahead of delivery. 

Tenants are also unique. Hyperscale companies, among the largest firms in the world, are projected to increase capital spending by 25 percent this year. Their size makes them reliable long-term tenants, but it also concentrates risk since a small number of companies lease nearly half of all data center capacity. 

Geographic Shifts and Power Innovation 

As major markets reach capacity, developers are expanding into secondary and tertiary regions. Even so, Northern Virginia and Dallas still accounted for half of all absorption in early 2025. 

Power constraints are also accelerating new energy strategies. Tech companies are signing long-term renewable power agreements, testing small modular reactors, and deploying demand-response programs that lower consumption during peak hours. In Texas, projects like the proposed “Hypergrid” aim to combine nuclear, solar, natural gas, and battery storage to serve AI campuses. Increasingly, data centers are financing power generation assets alongside real estate development. 

Market-Wide Impacts 

The ripple effects extend beyond data centers. Rising demand is straining grids and contributing to higher electricity prices. From May 2024 to May 2025, average U.S. residential electricity prices rose 6.5 percent, with far higher increases in states such as Maine, Connecticut, and Utah. At the same time, investment in grid infrastructure is improving resilience and capacity, which can benefit all commercial properties. 

Technologies pioneered in data centers, including liquid and immersion cooling as well as on-site renewable generation, are expected to spread into broader commercial real estate. These innovations will reshape how buildings manage power and cooling in the years ahead. 

Risks and Opportunities

For investors, data centers offer strong growth but also significant complexity. Tenant demand, limited supply, and rising rents make the sector attractive. Yet the energy intensity that drives returns also creates new operational and financial risks. 

CBRE Investment Management emphasizes that managing data centers requires specialized expertise and infrastructure capabilities. Tenant concentration presents an additional risk, as a handful of hyperscale companies account for much of the leased space. 

The MIT Technology Review projects that adoption of artificial intelligence will further accelerate energy demand, while the IEA estimates that data centers could contribute between 1 and 1.4 percent of global carbon emissions by 2030. At the same time, innovation in renewable energy, grid integration, and cooling technology may help offset environmental impacts and set new standards across commercial real estate. 

The CRE Perspective 

Data center energy consumption is reshaping the fundamentals of real estate. Power availability is becoming as important as location in determining value. 

For CRE professionals, this shift represents both opportunity and risk. Success will come from not only investing in data centers but also understanding how their energy demands influence utilities, infrastructure, and the wider market. In an energy-constrained future, firms that adapt to power-driven dynamics will be positioned to thrive. 

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