AI Boom Fuels Soaring Demand for Data Center & AI-Ready Industrial Properties

A seismic shift is underway in industrial real estate: land and facilities that can support data centers and AI infrastructure have become the hottest commodities. The rise of generative AI and cloud computing is driving companies to pour billions into new data centers, creating unprecedented demand for suitable properties. "The most valuable asset for the digital economy is no longer office space… It is land that can support data centers," as one industry report put it, noting developers are racing to secure sites with access to power, fiber, water, and favorable zoning.

At Holland Industrial Group, we have a nationwide portfolio of industrial sites and we're seeing this trend firsthand. We own properties across the U.S.—from large warehouses to manufacturing facilities—and many are now being eyed as potential data center locations.

AI & Data Centers: Demand Reaches Record Highs

The surge in AI adoption—from cloud services to generative tools like ChatGPT—has unleashed relentless demand for computing power. Training advanced AI models requires massive processing capacity, which in turn means building more data centers to house high-density servers and specialized AI chips.

In 2024–2025, major tech firms announced multi-billion-dollar investments in AI infrastructure: Google committed $40 billion to new data centers in Texas, and Nvidia has outlined up to a $100 billion stake in OpenAI to fund AI data centers and hardware. Construction spending on U.S. data centers hit an annualized $40 billion in mid-2025, a 30% jump from the previous year—doubling in just two years.

Nvidia and Wall Street analysts forecast that $3–4 trillion could be spent globally on AI-related infrastructure by 2030. This surge transforms industrial property markets, creating new opportunities for investors in land, power, and connectivity.

U.S. Data Center Construction Spending (Annualized, $ Billions)

Power Availability and Cost

Electricity is one of the largest operating expenses for data centers—up to 50% of total OPEX. Areas with low-cost, reliable electricity infrastructure are especially attractive for data center development. States like Texas, Georgia, and Tennessee offer industrial electricity rates in the range of $0.06–$0.07/kWh, making them prime targets for new builds.

By contrast, states like California exceed $0.25/kWh, putting them at a significant cost disadvantage. Power delivery timelines also matter—in constrained markets, extending transmission lines can take 3–5 years, delaying deployment. At Holland Industrial Group, we often help clients secure "power reservations" or identify sites with existing high-capacity substations.

Average Industrial Electricity Rates by State ($/kWh)

Connectivity and Network Access

Data centers must be connected to fiber networks with minimal latency. Northern Virginia (Ashburn) remains dominant due to its fiber density and proximity to global cable routes. Other major hubs include Dallas–Fort Worth, Atlanta, Chicago, and Phoenix—all with extensive long-haul fiber and regional cloud on-ramps.

Holland Industrial Group regularly evaluates a site's proximity to major fiber lines and can coordinate route mapping or telecom provider negotiations to enhance a property's value.

Tax Incentives and Economic Zones

States like Virginia, Arizona, and Illinois offer sales tax exemptions on data center equipment, while others like Texas provide property tax abatements and no income tax. Local enterprise zones or QOZs (Qualified Opportunity Zones) can further enhance returns.

In one recent example, Holland Industrial Group acquired a Virginia property with approximately 20 acres of unused land. Upon analysis, the land was found to be in a QTC (Qualified Technology Corridor), offering tax credits for digital infrastructure development—a major win for potential investors.

Top U.S. Data Center Markets

Bringing it all together, a few key U.S. regions stand out as prime destinations for data center and AI-focused real estate. These markets check the boxes on power, connectivity, incentives, and growth potential:

Northern Virginia

Fiber-rich and the nation's most established data center corridor. Dense but expensive, with expansion now heading into neighboring counties to meet surging demand.

Dallas–Fort Worth

Affordable power, low regulation, and ample land make DFW one of the fastest-growing data center markets in the country.

Phoenix

An attractive alternative to California with strong infrastructure, favorable climate for cooling efficiency, and competitive operating costs.

Atlanta

The Southeast's emerging hub with growing fiber connectivity, data center campus development, and strong regional demand from enterprise users.

Chicago

A major network crossroad with moderate costs, favorable climate, and extensive connectivity that attracts hyperscalers and colocation providers alike.

Top U.S. Data Center Markets by Pipeline Capacity (MW)

Actionable Guidance for Investors

For those evaluating investments in data center or AI-focused properties, here are key takeaways and strategies to consider:

Power is King: Prioritize sites with abundant, low-cost power. Check utility capacity and lead times for new service.
Connectivity is Queen: Assess fiber connectivity and latency. Proximity to major fiber trunk lines dramatically increases site value.
Leverage Incentives: Tax breaks for IT hardware, renewable energy credits, and foreign trade zones can significantly improve ROI.
Plan for Growth: Favor sites that can scale with multi-phase buildouts or expandable parcels to accommodate future demand.
Retrofit Opportunities: Consider existing warehouses and manufacturing facilities for conversion—many have the infrastructure bones for data center use.