CREW Special Report: Navigating Data Center Development

The data center development boom has become a hot topic in commercial real estate, especially as the data center construction market is estimated to grow to $21.43 billion by 2030, according to a study conducted by Modor Intelligence.

At the CREW Network Convention in Austin, Texas, presenters Nancy Novak, chief innovation officer at Compass Datacenters, and Kathleen Kauth, COO at Mantle Developments Inc., held a session where they discussed challenges, solutions and ways to approach the booming market.

“Data centers went from the industry that nobody knew about, to the industry that everybody hates,” Novak, joked in their session about how communities and power grids are “fed up” with the boom and disruption.

Kauth expressed how, in Virginia, there are currently 26 different attempts to block data center developments, and Novak backed this up by saying Compass was experiencing this with one of their ongoing projects in the state.

Forging partnerships for construction

Novak has recommended partnering with either general contractors, electric companies or precasters for projects, and forming long-lasting relationships to conduct these projects. She believes that this approach will bring the industry into the future and allow facilities to be upgraded as technology and infrastructure continues to change.

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LISTEN TO: Data Centers Are in Their Build-at-All-Costs Era

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At Compass, Novak explained they have partnered with Schneider Electric Co., where there is a built-in 10-year runway with a percentage increase for factors such as inflation every year. This helps build in flexibility, allows the project leaders to pivot and make these data centers future-proof. This idea makes the work more fun and comfortable as the parties involved understand the mindset and reach their shared goal, she explained.

Another successful practice is designing these facilities with an industrial manufacturing mindset. Compass Datacenters uses this strategy, which is “doing more with less,” Novak said. The benefits the company has seen from this include higher quality, increased safety and even lower costs, Compass has found. The company builds 70 percent of its data centers off-site, working with all partners to navigate the market and maintain efficiency, developing the project in a controlled environment. This model has resulted in 250,000-square-foot facilities to be built within two months.

Sustainability solutions

When talking about data centers, sustainability is bound to come up. Kauth offered her insights and tips on how to build these facilities to be more sustainable and future-proof as the industry continues to see high demand. Kauth first emphasized owner requirements—the approach giants like Google and Meta used to ensure their data center sites met certain sustainability targets.

Kauth shared that moving into the future of data center construction, environmental product declarations are going to be coming up more in conversation soon, as these are “the nutritional label” of a development. They showcase what the carbon footprint and all other effects on natural resources will be on a per-unit basis. These are held as part of the owner requirements.

She also expressed the need for innovation among regulators to tell these data centers what to do. “If the data center going into jurisdiction is raising electricity prices for regular rate payers, you’re doing it wrong,” Kauth said.

From a low-carbon construction standpoint, Kauth said there has been significant success. Sharing a story on how digital infrastructure companies are coming into local areas and developing a low-carbon material supply chain and using environmental product declarations. The discussion used swapping out concrete as an example since cement is one of the more expensive, higher greenhouse gas-emitting materials for construction.

Compass is approaching carbon emissions in four key ways, aligning with broader commercial real estate decarbonization strategy efforts across the industry. Novak listed them as product selection, means and methods, design decisions and the use of technology. These categories can overlap in some areas, but taking these four areas has been a way to implement decarbonization in data center development.