The buildings behind the algorithms

How AI data centers are quickly transforming real estate ecosystems

Artificial intelligence is often framed as a software story. In practice, it is just as much a real estate and infrastructure story.

Behind every AI model sits a vast physical footprint: land, power, cooling systems, fiber, and long-term operating facilities. As demand for compute accelerates, data centers are moving from a niche corner of industrial real estate to a force that is reshaping entire markets.

This shift is already visible across multiple asset classes and geographies.

From specialized asset to core infrastructure

Data centers were once treated as highly technical, single-purpose buildings. Today, they are increasingly viewed as essential infrastructure.

Hyperscalers and AI-focused firms are signing long-term leases and concentrating capacity near key population centers and network hubs. Northern Virginia remains the most established example, with Loudoun County alone hosting more data center capacity than most countries. As land and power constraints tighten there, pricing pressure and congestion have pushed development outward.

That dynamic is not unique. It is now repeating itself in other regions.

Power availability is redefining market winners

The main constraint for new data center development is no longer land availability. It is access to reliable power.

Markets like Phoenix, Dallas–Fort Worth, and Columbus have benefited from strong utility partnerships and grid capacity, making them attractive alternatives to more saturated coastal hubs. In parts of Ohio, former industrial sites with legacy power infrastructure are being repurposed for large-scale data facilities.

In Georgia, utilities and local governments have actively partnered with developers, leading to rapid growth in areas outside Atlanta’s urban core. These decisions ripple outward, driving up industrial land values and pulling capital into surrounding submarkets.

Industrial real estate feels the impact first

The clearest real estate impact shows up in industrial land and warehouse markets.

In North Texas, data center developers are now competing directly with logistics users for large parcels with highway access and fiber connectivity. In some cases, pricing assumptions that once supported distribution or light manufacturing no longer hold when a data center use is introduced.

This competition is forcing investors to rethink highest-and-best-use scenarios earlier in the underwriting process. Land banking, entitlement flexibility, and patience are becoming more valuable than speed.

Residential and mixed-use demand follows

While data centers themselves are not people-facing assets, the ecosystems around them are.

In markets like Ashburn, Virginia, and parts of central Oregon, clusters of data centers have brought in engineers, contractors, and specialized service providers. Over time, this has supported demand for housing, retail services, and supporting office space.

In Texas, smaller municipalities near data center corridors are seeing increased residential absorption and municipal investment, driven by higher-paying technical jobs and long-term tax revenue from infrastructure assets.

These shifts are gradual, but they tend to be sticky once established.

Long timelines reward disciplined capital

Data center development is not a quick trade. Power agreements, zoning approvals, and construction timelines stretch across years.

That reality favors investors with long-term capital, strong local relationships, and realistic expectations. It also raises the importance of alignment between investors, operators, utilities, and municipalities. Missteps in any one of those areas can delay projects significantly.

For disciplined investors, however, the demand drivers are unusually visible. AI compute needs are tied to long-term trends in enterprise software, automation, and cloud adoption, rather than short-term cycles.

A broader real estate implication

The rise of AI data centers reinforces a broader point about real estate: technology does not remove the importance of physical assets. Much to the contrary, it often intensifies it.

Markets with power, connectivity, and cooperative local frameworks are gaining relevance. Assets near those ecosystems benefit indirectly, even if they never house servers themselves.

For investors, understanding these second- and third-order effects is critical. The opportunity extends to land, industrial assets, housing, and mixed-use projects that sit within these expanding infrastructure networks.

At Gilberti Group, we see AI-driven data center growth as a clear example of how long-term fundamentals, local insight, and patient execution continue to matter, even as technology reshapes the global economy.