By Courtney Schmidt
The data center boom is well underway, but all expectations point to an even greater need for new facilities and significant growth in capacity in the coming years and beyond. According to research by McKinsey & Company, global demand for data center capacity is expected to grow at an annual rate of 19% to 22% through 2030. Even at that pace, their analysis suggests the supply of power may fall significantly short of demand.
One of the primary challenges that could limit the acceleration needed to support demand is the availability of appropriate land for data center development within proximity to available power load. The process of land identification and qualification is not as simple as finding open acreage. Many factors play a critical role in selecting and acquiring the right location.
Key considerations in land acquisition
“Every developer will want to identify a location that has available power and fiber. Those are the two biggest things that are universally desired,” said Courney Schmidt, Vice President at Atwell. “Other considerations include a stable climate with lower natural disaster risk, scalability, and a positive regulatory environment in a region helps.”
Developers should think through the following when considering a location for a data center:
- Defining requirements and infrastructure: What is needed in terms of capacity, connectivity, and footprint
- Location, location, location: Zoning requirements and regulatory requirements play a key role in the consideration process
- Environmental impact considerations: Are there advantages or risks in the terrain of the particular location? What will be needed for any environmental impact studies or permits?
- Title or survey issues: Are there any barriers or concerns that can be identified early in the process? Are there title issues that could present challenges?
- Evaluation of the surrounding area: Is there talent available to support the project? Are there any risks that pose a threat to the success of the project? (ex. hazardous materials nearby, surrounding traffic issues, flooding/severe weather potential, etc.)
Regional differences play a role as well. Markets that have seen strong interest and growth from a data center perspective include Michigan, Ohio, Georgia, and Texas. Some states in the U.S. have been more aggressive in terms of seeking development and offering incentives or regulation that makes land use for data centers more appealing to developers.
Shift toward land banking and speculative acquisition
To get ahead of accelerating demand, many developers are engaging in land banking by purchasing and holding sites for future use well before development is imminent. This approach allows for strategic positioning in high-demand regions where infrastructure expansion is anticipated. In some cases, land is being acquired speculatively before zoning approvals, utility access, or entitlements are secured. While this introduces a greater degree of risk, it also offers a significant first-mover advantage in emerging or underserved markets.
The Atwell advantage
Atwell can work effectively in multiple ways to assess and connect the pieces in a data center development puzzle.
A developer may come to the company with an expressed need and a goal of looking at viable sites within a particular region. They have a reason they want to be there which might be because of the availability of power or positive interest in adding development projects there. Atwell’s land acquisition teams serve as strategic partners in identifying and evaluating land opportunities, leveraging our nationwide presence and local market expertise. We provide critical analyses throughout the acquisition process, including environmental assessments, power availability, and risk mitigation to help clients select the optimal site for their project.
In some cases, our client is the landowner, often a residential or commercial developer with a portfolio of properties acquired over time. They’re seeking to unlock the highest value from their holdings but may be uncertain if data center development is a viable or optimal path.
Atwell brings strategic insight to help assess current market conditions, infrastructure alignment, and risk factors to determine whether data center deployment is a compelling and competitive use for their land. “Our advantage at Atwell is that we have our three business lines, traditional land development, power and energy, plus oil and gas, and those are the major strains for the data center industry today. We have the ability to not just be an advisor on land, but also to analyze the viability of developing on that land from a power perspective. It’s a uniqueness that we can bring to the table for clients in this market,” said Schmidt. “We also have a bigger picture view and set of experiences that can support clients through their entire journey. We lead with power design and engineering, electrical or natural gas, with a focus on speed, reliability, and integration. From concept through execution, we manage the critical power elements that keep data center projects moving.”
