How to Avoid Overpaying for Data Centers in a Competitive Acquisition Market

Feb 20, 2025

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Many investors think data centers in top markets guarantees strong returns...

But what if paying a premium actually puts your investment at risk?

Prime data center assets are selling for rich premiums, far above infrastructure sector averages.

Investors chasing high-demand, developed markets can sometimes be competing in a game where the odds are stacked against them.

While data center valuations reflect strong demand, compressed yields and rising costs can make it harder to generate attractive returns.

So if traditional strategies aren’t working, where should investors be looking?

Here are a few strategic alternatives:

Instead of overpaying for saturated markets, direct property acquisitions can give investors control over land and development.

Build-to-suit developments can reduce risk by securing tenants before construction.

Platform investments can provide access to long-term growth without the challenge of direct asset acquisition.

Emerging markets are reshaping the data center landscape.

South America, Southeast Asia, the Middle East, and Africa can offer lower land costs, competitive power rates, and growing AI and cloud demand. Investors who recognize this shift early can capitalize on growth that others are overlooking.

But location alone isn’t enough. Future-proofing is critical.

Scalability ensures assets can expand to meet demand. Energy efficiency lowers operating costs and boosts profitability. Regulatory alignment protects against shifting compliance risks.

Savvy investors also know that how you structure deals matters as much as where you invest.

Flexible lease terms secure long-term power and space pricing while keeping options open. Sale-leaseback transactions provide an opportunity to acquire assets while ensuring stable tenancy. Performance guarantees—such as SLAs for uptime and PUE targets—separate high-value investments from ticking time bombs.

Here’s the real insight.

The best data center investments aren’t where everyone is looking. They’re in the markets and deal structures that most investors are overlooking.

The biggest risk isn’t missing out on a deal. It’s paying too much for the wrong one.

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How to Avoid Overpaying for Data Centers in a Competitive Acquisition Market

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