Companion to: Real Estate Decoded Chapter 21 (Data Centers) - Workbook tab 12_Data_Centers
Inputs
Outputs
Critical kW
-
Total facility kW (PUE-adjusted)
-
Annualized lease revenue
-
Operating expenses
-
NOI
-
Implied value
-
Per-MW valuation
-
How to read this tool: Data centers are the highest-growth real-estate category 2018-2026. The lease-rate (priced per kW per month) and PUE (Power Usage Effectiveness) are the two key metrics. Modern hyperscale facilities run 1.15-1.25 PUE; legacy enterprise data centers run 1.5-2.0. The dedicated-nuclear-power model (Three Mile Island for Microsoft, Susquehanna for AWS) is the structural shift in 2024-26.
What this tool is for
Data centers have compounded NAV faster than any other commercial real-estate category over the last decade. Digital Realty, Equinix, the privately-held Digital Bridge / DataBank, Cologix, and the hyperscale-captive infrastructure (AWS, Azure, Google Cloud build-to-suit) make up the institutional universe. This tool gives you the $/kW-month / PUE / cap-rate framework that drives valuation conversations.
Benchmarks the practitioner watches
- Hyperscale build-to-suit lease: $135-160/kW/month, 15-20 yr term
- Colocation retail: $200-280/kW/month, 3-7 yr term
- PUE: 1.15-1.25 modern hyperscale standard
- Cap rate: 5.5-6.5% on stabilized contracted hyperscale
- Per-MW value: $25-50M on stabilized institutional
Common mistakes
- Underwriting at peak lease rates without checking the renewal-cycle exposure
- Missing the power-supply constraint - can you actually get incremental MW at the site?
- Ignoring chip-cycle technology risk (AI workloads driving 50+ kW/rack density vs. legacy 5-10 kW/rack)
- Treating colocation lease economics as equivalent to hyperscale - the operating intensity differs materially
Educational reference only. Not investment, tax, legal, or real-estate advice. Confirm market-specific cap rates, lender terms, and tax overlay with your own advisors before acting.