The surge in AI applications has dramatically increased the need for computing power, storage, and connectivity. Unlike traditional cloud systems, AI training models require enormous amounts of energy and space, making existing data centers quickly reach capacity.

Every time an AI system processes images, generates code, or analyzes vast data sets, it relies on servers housed in climate-controlled, power-intensive facilities. The more sophisticated AI becomes, the greater the strain on these physical infrastructures.

In short, AI doesn’t just live in the cloud — it lives in real estate.

Supply Struggles to Keep Pace

While the demand is skyrocketing, building new data centers isn’t easy. Developers face a range of hurdles, including:

• Limited access to power grids that can handle high electrical loads

• Lengthy permitting processes and zoning restrictions

• Scarcity of suitable land near fiber networks or cooling sources

• Environmental concerns around energy use and carbon footprint

As a result, even tech-friendly markets like Massachusetts, Northern Virginia, and Texas are experiencing capacity constraints — leaving tech firms and cloud providers competing for limited space.

Rising Rents and Investor Interest

With supply tight and demand soaring, data center rents have surged. According to industry analysts, rental rates in top-tier data center hubs have climbed by double digits over the past year.

Investors and developers are taking note. Real estate investment trusts (REITs) specializing in digital infrastructure, like Digital Realty and Equinix, have seen significant growth. Meanwhile, private equity firms and institutional investors are entering the space, recognizing that AI infrastructure is the new frontier of commercial real estate.

For investors, the message is clear: data centers are the warehouses of the information age.

Massachusetts: A Growing Data Hub

In the Northeast, Massachusetts is emerging as a strategic data center location, particularly in the Greater Boston and Merrimack Valley areas.
Proximity to universities, biotech firms, and AI startups makes it a logical hub for edge computing and research applications.

However, available sites that meet energy, zoning, and fiber requirements are limited — creating both competition and opportunity for developers looking to repurpose or redevelop industrial properties.

For towns like Andover and North Andover, with access to robust infrastructure and available commercial space, this could signal new waves of redevelopment tied to the data economy.

The Energy Challenge

The biggest obstacle to meeting AI demand is power. Data centers consume enormous electricity, not only to run the servers but also to keep them cool. Some facilities use as much power as a small town.

To mitigate this, operators are investing in renewable energy partnerships, battery storage, and advanced cooling technologies — a step that aligns with state-level climate goals, especially in Massachusetts where green mandates are strong.

This convergence of AI growth and sustainability innovation is giving rise to a new type of tech real estate — one that values efficiency as much as capacity.

The Outlook: A Data-Driven Real Estate Frontier

Experts predict that the global data center market will continue expanding at double-digit rates for years to come. As more industries integrate AI, from healthcare to real estate itself, the need for robust, low-latency computing environments will only increase.

For property owners and investors, this means:

• Stronger demand for industrial and power-ready land

• Conversion opportunities for underutilized commercial properties

• Long-term income stability in lease-driven data center projects

In a sense, the next great tech boom isn’t happening online — it’s happening on the ground.

As AI reshapes how we live, work, and connect, data centers have become the silent engines of progress.
But with construction lagging behind innovation, shortages are inevitable — and those who understand the interplay between technology and real estate will be best positioned to thrive.

In the race to power AI, location, energy, and resilience are the new cornerstones of real estate value.

Matt Witte strives to be the best realtor in North Andover, MA.

Any questions about real estate, reach out to Matt Witte, North Andover Realtor, MA