Data centers are already set to be a major force in the evolution of the industrial space. With the need to accommodate quickly developing artificial intelligence, they will become a complete necessity.
Industry projections reveal that demand for data centers is expected to skyrocket by 100% over the next five years. With this explosive growth, billions of dollars are at stake as businesses race to secure the infrastructure to power the future of AI and beyond.
Read on, and you’ll learn:
- How billions in investments transform industrial sites into state-of-the-art data centers
- What it takes to turn a property into a fully operational data center
- Why data centers are becoming the backbone of the digital economy
Major Investments in Data Centers
The race to meet skyrocketing demand for data centers is driving massive investments in the industrial space. Developers and tech giants are pouring billions into cutting-edge facilities to support the rapid expansion of artificial intelligence and other data-heavy technologies.
One standout project comes from AVAIO Digital Partners, which has unveiled plans to convert a 452-acre industrial site in Appomattox County, Virginia, into a $3 billion state-of-the-art data center campus.
The campus will draw on 300 megawatts of power from public utilities like the Central Virginia Electric Cooperative (CVEC) and Dominion Energy.
In a bid to align with sustainability goals, AVAIO is also incorporating substantial onsite green power into its operations. The project underscores Virginia's rising prominence as a data center hub, with Governor Glenn Youngkin highlighting the initiative as a catalyst for economic growth and diversification across the state.
AVAIO's ambitious development follows another major announcement: Meta's $10 billion investment in artificial intelligence infrastructure. Meta is constructing a four-million-square-foot data center in Richland Parish, Louisiana, in partnership with utility provider Entergy.
This project marks one of the largest private capital commitments in Louisiana’s history, reflecting the seismic shift AI is driving across industries.
These massive investments are just the beginning. AVAIO alone manages more than $6 billion worth of data center properties, positioning itself as a key player in a market poised for exponential growth.
These projects signal a pivotal moment in the evolution of industrial real estate, as data centers emerge as indispensable infrastructure for the digital economy.
Let’s take a closer look at what it takes to turn an industrial site into a data center.
What’s in a Data Center?
Building a data center isn’t as simple as repurposing a warehouse or factory. These facilities demand specialized infrastructure, immense power capacity, and cutting-edge cooling systems to ensure uninterrupted performance.
These facilities are designed to handle enormous volumes of data while maintaining reliability, security, and efficiency. From zoning and utilities to advanced sustainability features, every detail must be carefully planned. So, let’s break down what is necessary:
1. Site Assessment: Finding the Right Location
Transforming an industrial site starts with a comprehensive evaluation. First, the property must be zoned for data center use. If not, navigating the complex web of local regulations and securing zoning approvals is essential.
Physical attributes of the site matter, too. Is the land stable? Is it free from natural risks like floods or earthquakes? Does it offer proximity to critical utilities like power grids and high-speed fiber optic networks? These factors can make or break a project.
2. Power: The Lifeline of Data Centers
Data centers are energy monsters, requiring immense power supplies—often upwards of 100 megawatts. That’s enough electricity to power a small city. Collaborating with utility providers to ensure reliable energy delivery is non-negotiable.
Today’s tenants demand more than just power; they want green power. Incorporating renewable energy sources like solar, wind, or hydro into the project isn’t just an environmental checkbox—it’s a selling point.
Because carbon-neutral energy efficiency is becoming the standard. Many projects pursue certifications like LEED, signaling compliance with green building standards. Closed-loop cooling systems conserve water, while carbon offset initiatives aim to balance energy consumption with environmental impact.
Onsite energy solutions, such as solar arrays or microgrids, are increasingly popular. However, naturally sourced carbon-free technology isn’t always the most reliable. That’s why, in the future, we may see more nuclear power integrated. Read more about what this means in Are Small Modular Reactors the Future?
But for now, redundancy is key: backup generators and uninterruptible power supplies (UPS) ensure operations continue, even during outages.
3. Cooling Systems: Keeping the Heat in Check
Servers generate heat- lots of it.
Advanced cooling systems are critical for maintaining optimal conditions. Depending on the region’s climate, solutions may range from liquid cooling to free cooling or evaporative systems.
Forward-thinking developers are also exploring heat recovery systems that redirect excess heat for practical use, such as warming nearby buildings. These features not only improve efficiency but can also reduce costs over time.
4. Security: Physical and Digital Protection
Data centers hold the world’s most valuable asset: information.
Security is paramount. Physical barriers like fences and biometric access controls work alongside constant surveillance and 24/7 onsite monitoring to prevent unauthorized access.
Beyond physical threats, cybersecurity is a top priority. Advanced firewalls and intrusion detection systems safeguard against digital attacks, ensuring the uninterrupted flow of data. Of course, all this takes a lot of energy.
5. Design and Construction: Built to Last
Every data center needs to be custom-built to meet its tenant’s needs. Whether it’s ensuring high rack density or planning for modular expansions, flexibility is key.
Data centers must also withstand extreme weather and seismic activity, requiring reinforced structures and meticulous design. Developers are increasingly opting for modular components that allow for quicker construction timelines and easier scalability.
6. Connectivity: The Backbone of Operations
Without robust connectivity, even the most advanced data center will fail. High-speed fiber optic networks, edge connectivity solutions, and multiple network providers ensure low-latency, uninterrupted data flow.
For facilities aiming to handle AI workloads or edge computing, proximity to end users is critical. This is why many projects focus on regions that combine affordable land with excellent connectivity infrastructure.
For example, AVAIOS’ selection of their $3 billion data center investment in Virginia was strategic. That location positions them to address the growing digital needs in the region.
7. Operational Readiness: Ensuring Long-Term Success
Once the site is ready, the real work begins. Data centers require a highly skilled workforce to manage day-to-day operations, from IT engineers to security experts.
Continuous monitoring systems track server performance, environmental conditions, and energy use to prevent issues before they arise. Meanwhile, tenant collaboration ensures that client needs—like uptime guarantees and security protocols—are consistently met.
As the demand for data centers accelerates, corporate tenants must recognize the pivotal role these facilities will play in shaping future business landscapes. The explosion of AI and digital services is driving a shift in how industrial spaces are used, with billions of dollars being invested in infrastructure to support this growth.
For businesses looking to stay competitive, it’s essential to understand what it takes to create and operate a data center—power, cooling, connectivity, and sustainability. As these sites evolve into the backbone of the digital economy, staying informed about these changes can help tenants make smarter decisions about their real estate needs.
The rapid rise of data centers offers an opportunity for tenants to align with the next wave of technological innovation. Now is the time to think about how these evolving spaces will fit into your long-term strategy. So don't risk getting left behind. Subscribe to the blog to get industrial insights delivered to your mailbox.
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