A Lower-Risk Real Estate Thesis for Data Center Growth
Data centers are drawing extraordinary amounts of capital, power, land, equipment, and public attention. That does not mean the most attractive real estate investment is the data center itself.
The direct investment requires specialized expertise. Power availability can determine whether a project proceeds at all. Cooling, fiber, redundancy, security, equipment cycles, utility agreements, and a small universe of sophisticated tenants create risks that conventional real estate underwriting can underestimate.
Our thesis is different:
Instead of underwriting the server hall, look for the ordinary real estate required to build, maintain, and support the surrounding operating ecosystem.
That approach does not eliminate risk. It can, however, create exposure to a powerful growth trend through properties that remain useful to other industries.
The demand is real, but the forecasts are wide
The U.S. Department of Energy estimates that data centers consumed about 4.4% of U.S. electricity in 2023. Its 2024 study projected that share could rise to 6.7% to 12% by 2028. A later update extended the range through 2030 and again emphasized substantial uncertainty.
Texas and Arizona sit near the center of this expansion. The U.S. Energy Information Administration has identified computing facilities as a major source of electricity-demand growth in Texas and expects continued data center demand growth in the Southwest, including Arizona. Industry research places both Dallas–Fort Worth and Phoenix among North America's primary data center markets.
Those facts establish the scale of activity. They do not tell an investor which announced campuses will be energized on time, which tenants will occupy them, or how local regulation and infrastructure constraints will evolve.
That uncertainty is precisely why we prefer the surrounding ecosystem.
A data center is also a supply chain
A large computing facility may look quiet after completion, but it depends on a broad physical network:
- Electrical and mechanical contractors
- Generator, battery, switchgear, cooling, and controls specialists
- Fiber and telecommunications installers
- Security and fire-protection providers
- Equipment staging and secure storage
- Spare-parts inventory and field-service teams
- Construction, testing, commissioning, and maintenance personnel
- Truck access, temporary yards, and fleet parking
Many of these businesses need functional industrial space near several customers. They may value drive time, security, power, yard access, loading, and flexible lease configurations more than a prestigious address.
That creates potential demand for small-bay industrial, flex buildings, contractor yards, equipment storage, and adaptive-reuse properties. Crucially, those assets may also serve advanced manufacturing, utilities, construction, aerospace, logistics, and other regional industries.
Power constraints change the geography
The data center boom is often described as a land rush. In practice, the binding constraint is frequently power.
DOE notes that data center load is large, geographically uneven, and often dependent on firm electricity. EIA has shown how forecasts for large flexible loads in Texas can vary substantially depending on interconnection approvals and project execution.
For direct data center sites, this can produce a binary outcome: power arrives or it does not.
Support properties can be less binary. A contractor building five or fifteen miles from a campus may remain useful even if one project is delayed, particularly where several data centers, utilities, manufacturing plants, and construction projects share the same labor and supplier base.
We therefore prefer established industrial nodes with multiple demand drivers over isolated parcels whose value depends on one announced campus.
The picks-and-shovels property test
We evaluate support real estate by asking:
- Does the property serve several data center campuses or only one?
- Can it support non-data-center tenants without major capital work?
- Are power, security, loading, circulation, and yard space appropriate for likely users?
- Is the location close to skilled labor and major roads?
- Does current rent support conservative debt service before any growth premium?
- Is demand based on recurring maintenance and operations or only temporary construction?
- Can bays be divided as tenant needs change?
The distinction between construction demand and operating demand matters. A temporary contractor yard can be valuable during a buildout and empty afterward. A diversified small-bay property near a mature industrial cluster may capture both phases while retaining a broader tenant base.
Dallas–Fort Worth and Phoenix
Dallas–Fort Worth combines a large data center market with logistics, defense, manufacturing, construction, and a deep business-services economy. Phoenix combines major computing investment with semiconductor manufacturing, aerospace, logistics, and rapid metropolitan growth.
In both regions, we are more interested in the intersection of industries than in a single headline. A controls contractor, electrical supplier, equipment-repair business, or secure-storage user may serve data centers today and other critical facilities tomorrow.
That is the type of optionality we want the real estate to preserve.
The investment conclusion
Data center growth is likely to reshape regional infrastructure, but enthusiasm is not a substitute for cash flow.
We do not need to own the highest-specification building to participate. We would rather own useful, adaptable property around expanding infrastructure—purchased at a basis and financed on terms that work without assuming every forecast comes true.
The goal is indirect exposure with direct utility.
Bring us the property behind the uptime
Draymoor Ventures is seeking small-bay industrial, flex, contractor, storage, yard, and adaptive-reuse properties near durable technology and infrastructure clusters in Texas and Arizona.
We are particularly interested in sale-leasebacks, succession situations, overlooked service properties, and assets supporting several mission-critical customers.
If a property houses the people, parts, equipment, or services that keep critical facilities operating, we want to understand it.
Share an opportunity: Steven@DraymoorVentures.com
Sources
- U.S. Department of Energy, DOE Releases New Report Evaluating Increase in Electricity Demand from Data Centers. https://www.energy.gov/articles/doe-releases-new-report-evaluating-increase-electricity-demand-data-centers
- U.S. Department of Energy, Powering America's AI Future—Data Center Resource Hub. https://www.energy.gov/powering-americas-ai-future-data-center-resource-hub
- U.S. Energy Information Administration, Data Centers and Cryptocurrency Mining in Texas Drive Strong Power Demand Growth. https://www.eia.gov/todayinenergy/detail.php?id=63344
- U.S. Energy Information Administration, Fossil Generation Could Rise with Faster-than-Expected Growth in Data Center Power Demand. https://www.eia.gov/todayinenergy/detail.php?id=67344
- CBRE, Global Data Center Trends 2025. https://www.cbre.com/insights/reports/data-center-trends-2025