FTI Experts’ Hub: Data Centers Are in Their Build-at-All-Costs Era

September 30, 2025

Podcasts Data Centers Development Featured More National

The need for compute power outweighs any financial incentive that you can find, McRae Thompson told CPE’s Laura Valean in this podcast.

Demand for data centers has never been higher. AI’s rapid advancement and the associated compute requirements have been key drivers of development nationwide.

“Even when potentially facing a large tariff, it’s not necessarily stopping people from developing data centers because it’s a long-term play,” said McRae Thompson, senior managing director & leader of the Real Estate Tax Advisory group at FTI Consulting, in the latest FTI Experts’ Hub podcast episode with Commercial Property Executive Senior Editor Laura Valean.

To attract developers, municipalities can be very flexible in negotiating incentives, but not all jurisdictions are open to these investments because of public pushbacks. One way to avoid these is engaging with the local community early and often to establish a mutually beneficial partnership.

“It’s kind of a revolving door, I would say. One locality might be flexible one day, it might not be the next day just because of other incentives that might been already offered and/or the public reaction to those incentives,” Thompson said.

But demand for data centers is so high that financial incentives can hardly ever be a deal-breaker. These facilities are getting bigger and more complex, and are often financed by foreign investors interested in deploying capital in this rapidly growing U.S. sector.

Going forward, as more data center facilities become operational, Thompson believes there will be more talks around how to tax digital services. “When you have a value-added service, who should pay the tax? Should it be the provider? Should it be the recipient?” Thompson asked.

Here’s a breakdown of the topics he dives into in this episode:

“I think most tech-friendly type jurisdictions are going to continue to bet on the future and continue to enhance their incentive programs,” Thompson told Valean in this podcast. Image courtesy of FTI Consulting

(0:59) Tariffs and financial feasibility
(2:55) State and local taxes
(5:35) Effective economic incentives
(6:51) Flexibility in incentive negotiations
(9:10) Quantifying the value of incentives
(10:14) Do incentives actually move the needle?
(11:15) PILOT programs
(13:20) Are energy-efficiency incentives still relevant?
(14:37) Maximizing tax advantages
(16:29) Foreign investment in U.S. data centers
(18:58) Common challenges
(20:05) What’s next