Data Center Construction: Are We Building the “Shopping Malls” of 2036?

The data center boom is accelerating, but so is the risk of building facilities that may not fit tomorrow’s computing needs. As designs become more specialized, their long‑term value becomes less certain.

Understanding where that risk shows up — and why it matters — can help you make choices that hold up a decade from now.

Why data centers stand alone in a tightening market

Across commercial real estate, construction activity is facing significant constraints. Elevated interest rates, rising material costs, and a limited labor pool have slowed or stalled new development across most property types. Contractors who once moved easily among sectors now see softening pipelines almost everywhere, except data centers.

Data centers remain the clear exception. Demand for AI‑driven computing continues to climb, and major cloud and technology platforms are advancing large‑scale infrastructure programs relatively insulated from the financial pressures affecting the broader market.

For many construction firms, these projects have become the most active and technically demanding assignments underway, requiring substantial on‑site labor, highly coordinated engineering, and extensive electrical and cooling infrastructure. Strong demand for power‑ready sites, paired with an industry‑wide shortage of skilled labor, has only tightened development timelines further.

Amid this momentum lies a more fundamental question.

What will highly specialized facilities be worth a decade from now?

Today’s mega‑campuses may be designed for a version of computing that evolves faster than the useful lives of the systems they depend on. The risk is not today; it’s the moment investors seek an exit 10 years from now.

The dynamic recalls the enthusiasm that once surrounded America’s shopping malls. What was once viewed as the future of retail became vulnerable when consumer behavior and technology shifted.

As today’s extraordinary demand normalizes, what happens to these single‑purpose assets if tomorrow’s computing needs no longer match the infrastructure we are racing to build?

Data center build‑fast mindset vs. Long-term reality

Short-term conditions remain extremely strong. Power-qualified land is scarce, hyperscalers are committing to pre-leasing at a rapid pace, and the urgency to bring new capacity online continues to support premium pricing.

Many developers see a straightforward strategy: move quickly, deliver efficiently, and exit into a market where demand still exceeds supply.

Institutional investors with longer time horizons face a more complex reality. Their returns depend on the stability of the final decade of ownership rather than the first few years.

If cooling systems or electrical designs fail to align with future chip sets or evolving density patterns, the risk of impairment increases. Because a significant share of a data center’s value is tied to systems with short useful lives, even modest shifts in computational requirements could materially affect valuation.

This growing divide between near-term enthusiasm and long-term technological uncertainty has become one of the defining strategic challenges in the sector.

Financial consequences of a single‑use future

Data centers differ from most commercial property types in one critical way. A much larger portion of their value resides in mechanical, electrical, and plumbing systems with short useful lives. Cooling equipment, electrical gear, generators, batteries, cabling, and switchgear all reflect current engineering assumptions.

If those assumptions change, the financial implications can be significant. Useful life may shorten. Depreciation may accelerate. Impairment risk may rise. Retrofitting may become expensive and operationally disruptive.

Long-term power agreements also create exposure. Contracts designed to secure reliable energy today may become burdensome if future workloads require substantially less power. Rising material costs, tariff-driven price pressures, and persistent labor shortages further complicate the economics of modernization.

As these facilities become increasingly specialized and costly, owners face greater risk if the underlying computing paradigm evolves in unexpected ways.

A strategic path for commercial real estate construction

Long-term value favors those who prioritize flexibility. Modular systems, adaptive cooling pathways, scalable electrical capacity, and underwriting that anticipates multiple technological futures may become differentiators.

Energy required per calculation is generally expected to decline, similar to the rapid drop in storage costs two decades ago. If that occurs, the most successful investors may not be the ones who built the largest facilities. Instead, they may be the ones who integrated optionality into every layer of design and financial planning.

The question is not whether these assets perform well today. The question is how they’ll perform once the current wave crests and what they’ll be worth 10 years from now.

How CLA can help you build real estate value

CLA’s real estate team brings together deep technical skills and industry experience to support clients through every stage of the real estate lifecycle. From early strategy and development decisions to long‑term ownership and eventual exit, we help investors understand how today’s choices could affect tomorrow’s value.

Our perspective integrates financial, operational, and accounting considerations so real estate owners can plan for performance now while anticipating future demands.

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