Scale of the Capital Commitment
Microsoft announced $80 billion in data centre investment for fiscal year 2025. Google committed $75 billion.
Amazon disclosed $104 billion for 2025. Meta guided to $60-65 billion.
These are not projections;they are committed capex figures from companies with the balance sheets to execute them. CBRE estimated global data centre construction reached $50 billion in 2024 and is tracking higher in 2025.
This is infrastructure investment at a scale that rivals electricity grid modernisation or motorway construction programmes. The driver is not incremental IT growth. What changed is AI training: a single large model training run can consume more compute in two weeks than an enterprise IT department consumes in a year. Hyperscalers are building compute factories, not server rooms. The architecture, power density, and cooling systems of these facilities are categorically different from conventional data centres.
Power: The Binding Constraint
Data centre expansion is constrained not by capital or land but by power. Connecting a new data centre to the electricity grid requires substation upgrades, transmission capacity additions, and regulatory approvals.
In primary US markets;Northern Virginia, Silicon Valley, Phoenix;power procurement timelines have extended to 3-5 years. Northern Virginia's Loudoun County had 3,800MW of operational data centre capacity in 2024, with a further 2,500MW under construction.
Ireland;home to European data centre clusters for AWS, Meta, Google, and Microsoft;imposed a moratorium on new grid connections for data centres in the Dublin area in 2021. The moratorium was partially lifted in 2023, with conditions. The UK's National Grid estimates AI data centres will require 5-7GW of additional generation capacity by 2035. Power scarcity in prime locations is the dominant constraint on data centre supply growth.
Real Estate Dynamics: Cap Rates and Investment Flows
Data centre real estate has historically traded at 6-8% cap rates;higher than prime office or logistics, reflecting technical complexity and customer concentration risk. As institutional capital has recognised data centres as critical AI infrastructure, cap rates have compressed to 4.5-5.5% for well-located, GPU-capable facilities with long-term leases. A 1MW AI data centre generating $8M/year in revenue from a credit-quality tenant on a 15-year lease might trade at $160-180M;a 4.5-5.0% cap rate.
Five years ago, the same asset might have traded at $100-110M. Private equity and infrastructure funds;Blackstone, KKR, Brookfield, and specialist operators like Digital Bridge;have invested hundreds of billions in data centre assets since 2022. For detailed financing models, deal comparables, and investment case review for data centre assets, speak to our advisory team at disintermediate.global/services.
The GPU-Ready Facility Premium
Not all data centres can host AI workloads. The power density requirements (120kW per GPU rack versus 5-10kW for enterprise racks), liquid cooling infrastructure, and high-bandwidth networking eliminate most existing facilities.
Knight Frank's 2025 data centre capex benchmarks establish greenfield GPU-capable facility construction at $15-17.25M per megawatt, versus $6-8M per megawatt for standard enterprise facilities;a 75-100% premium. Colocation pricing for GPU-capable space runs at $650-900 per kilowatt per year in primary markets, versus $180-280 for standard enterprise colocation. The shortage of GPU-capable facilities;fewer than 400 globally meet current-generation specifications;gives operators with qualifying assets significant pricing power.
Where New Supply Is Being Built
New data centre development is concentrating in locations that satisfy three criteria: available power, water access for cooling tower evaporation, and political stability. Texas and Arizona are expanding rapidly in the US;lower land costs, business-friendly regulation, and renewable energy availability.
The Nordics (Sweden, Norway, Finland) attract investment through abundant renewable hydropower, naturally cold climate, and political stability. Malaysia and Indonesia are emerging as data centre hubs for Asian workloads.
Saudi Arabia and the UAE are building at scale with sovereign capital. The UK has concentrated development in west London (Slough, the M4 corridor) for European-standard facilities with proximity to financial services customers. This geographic dispersion is partly a response to concentration risk;the 2021 Virginia power outages and 2023 Dublin grid constraints illustrated the systemic risk of over-reliance on single locations. Disintermediate provides market intelligence and investment analysis across data centre real estate;contact us at disintermediate.global/contact.
Hyperscalers committed $300B+ in data centre capex in 2025;this is compute factory construction, not incremental IT growth
Power procurement timelines of 3-5 years in prime US markets and grid moratoria in Ireland and the Netherlands constrain supply growth
AI data centre cap rates have compressed to 4.5-5.5% from 6-8%;repricing reflects market confidence in durable AI demand
GPU-capable facilities cost $15-17M/MW to build versus $6-8M/MW for standard enterprise;fewer than 400 globally meet current specifications
New supply is concentrating in Texas, Arizona, Nordics, Malaysia, and Gulf states;driven by power availability, land cost, and political stability