Data Center Bytes

Merger and acquisition (M&A) activity involving data centers and digital infrastructure had a record year in 2024, and all signs point to that trend continuing in 2025. Market strategies and capital raising in this space are evolving rapidly as investors, developers, and operators seek to take advantage of the high demand. Factors that were determinative of market norms only months ago have become less relevant and new factors driving the market have emerged.

While a data center may seem similar to a large warehouse, data centers are high-intensity utility consumers that have special requirements compared to a typical warehouse acquisition project. There are several crucial items to address in negotiating purchase and sale agreements and conducting due diligence of land for the development of data centers.

The convergence of three disruptive forces—(1) migrations from on-premises data centers to the cloud, (2) the increased focus on connected device and digital solutions, and (3) the explosive rise of generative AI—has resulted in a race to finance, design, build, power, and operate data centers to support them. This growing demand for data centers is prompting significant regulatory, operational, and infrastructure developments throughout the world, including recent initiatives and investments in the United States, Europe, and the Middle East that underscore this growing momentum.

The Winter 2025 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey highlights significant changes in California’s commercial real estate market, driven by the growing adoption of cloud computing, machine learning, artificial intelligence (AI), and the shift to hybrid working models, all of which have led to data centers and related digital infrastructure being the largest growth sector in new industrial projects.