Data Centers and the Multiplier Effect

By Ed Del Beccaro, TRI Commercial/CORFAC International

A summary of Ed Del Beccaro’s column that appeared Sep 01, 2026, in Real Assets Adviser Newsline "Data Centers and the Multiplier Effect"

The massive structural shift toward artificial intelligence (AI) has positioned data centers as a major new property type for investor portfolios. Driven by tech giants outbidding traditional commercial real estate for land, labor, and equipment, U.S. data center spending dramatically accelerated to $11.5 billion early in the year, with first-quarter 2026 alone reaching $36.9 billion. If this pace continues, annual construction spending could hit $116 billion, focused primarily in top-tier power sites like Virginia and Texas, with significant investments expanding into states like Ohio, Pennsylvania, and Oregon.

Economic and Job Multiplier Impact

This digital infrastructure boom serves as a powerful regional economic engine. "Hyperscalers" like Alphabet, Amazon, Meta, and Microsoft are projected to invest upward of $500 billion in large-scale data centers in 2026 alone. This spending creates a strong local job multiplier effect, generating 3.5 to 6 indirect jobs in utilities, logistics, and services for every single direct data center role. Over 108,000 temporary construction jobs are expected in 2026. Furthermore, advanced engineering clusters—spanning manufacturing, battery storage, and advanced cooling—are elevating specialized roles, making "data center technician" one of Ohio's fastest-growing job titles. A Brookings Institution study confirmed that host counties experience a 3% to 4% increase in local employment, alongside substantial gains in real and personal property tax revenues that increase over time as equipment is continually upgraded.

Investment Opportunities and Yields

The data center asset class is significantly outperforming traditional real estate. The AI Consulting Network estimates target yields of 10% to 14% net IRR for stabilized core assets (with compressed cap rates of 4.5% to 6%) and 18% to 25% IRR for value-add opportunities. Institutional investors are moving quickly; for instance, the Principal Data Center Growth & Income Fund closed at $3.6 billion to develop U.S. and European hyperscale facilities. While primary development markets include Atlanta, Phoenix, and Northern Virginia, future expansion is targeting areas like Boise and Des Moines due to lower power costs and faster approval timelines.

Utility Demands and Grid Evolution

Despite their economic benefits, data centers face community backlash due to immense energy and water demands. Local resistance and construction moratoriums have emerged in parts of Virginia, California, and New York as residents fear utility rate hikes and power shortages. An average data center consumes 360,000 gallons of water per day for cooling, prompting a shift toward closed-loop fluid systems and geographic pivots to cooler climates like the Nordics to access cheaper hydraulic power.

To bypass severely constrained local grids—which suffer from 4- to 7-year waiting queues—operators are evolving into proactive grid managers by building localized microgrids. Tech giants are heavily reviving nuclear energy as a 24/7 carbon-free power source. For example, Microsoft signed a deal to revive Pennsylvania's Three Mile Island for 800 megawatts, while Meta secured 1.1 gigawatts of nuclear power in Illinois. Next-generation battery technologies (nickel, zinc, and sodium-ion) are also being deployed to replace traditional lithium storage for enhanced safety and supply resilience.