Data Centers Do More Economically Than Power AI

Data centers have become an important part of commercial real estate. Demand for them is projected to double by 2030, says Newmark. Asking rents are soaring, according to a previous CBRE report.

A newer analysis from CBRE acknowledges the impact of artificial intelligence but says that is only part of the equation. “Digital infrastructure has never been more important to providing reliable connectivity for business, commerce, and communication,” CBRE wrote. “Development of new data center facilities is not only accommodating advanced technologies like artificial intelligence but is also contributing to widespread economic growth.”

They pointed to data from PwC claiming that data-center-related jobs increased by 20% from 2.9 million to 3.5 million between 2017 and 2021, 10 times larger than overall U.S. job growth during the same period. Given the rate of data center construction growth, it doesn’t seem surprising. However, as research into information technology has shown over the years, the facilities are not job-intensive operations. Multiple locations typically can be controlled from a central facility.

CBRE also points to a PwC estimation that every “direct job in the U.S. data center industry helps to create 7.4 ancillary jobs on average throughout the U.S. economy.” These sorts of assertions are often difficult to quantify and prove.

Local and state tax revenues are also important, as exemplified in Virginia, Nebraska, and Ohio.

“In Northern Virginia’s Loudoun County, tax revenue from computer equipment purchases for data centers surged by 170% to $582 million in 2023 from $215 million in 2021—two and a half times the tax revenue from motor vehicle sales,” CBRE wrote. “This boost in revenue has provided significant funding for public education, infrastructure, public health initiatives, capital improvement programs, and parks and recreation amenities.”

Nebraska has become another important location for data centers providing either colocation providers (third parties that run services for their business clients) or cloud-based services. According to a CBRE estimate, annual property taxes from a single data center “can be 110 times greater than those from agricultural land.” And according to data quoted from Magnum Economics, 490 people were working full-time in the state’s data centers, while 1,500 construction workers were building new ones in 2022, providing combined tax revenue of $1.3 billion.

As for Ohio, “Large-scale data center development in Ohio has generated thousands of construction, operations and maintenance jobs and contributed billions of dollars to the state’s GDP,” CBRE wrote. “Beyond direct employment, data centers create a network of support positions in telecommunications, software development, facilities management, and electricity generation. Data centers also contribute to educational programs, including professional training to meet the high demand for tech talent.”