Why the rush to build data centers?
Let’s ignore all the technology chatter for now. Forget the debates about the infrastructure demands of these massive computing sites. And we’ll also sidestep the big question marks about artificial intelligence – the key driver of data center demand.
If you follow the money, however, you see a major force behind developers’ thirst to construct data centers: They’ve been one of the nation’s hottest real estate investments.
That’s what my trusty spreadsheet found when looking at Nareit indexes tracking values of real estate investment trusts owning properties across 15 key categories. These benchmarks calculate price swings and dividends paid.
The value of trusts that own data centers rose 33% so far in 2026, the second-best performance in the REIT industry, and more than double a 15% gain for all trust assets.
What’s performing better in 2026? Trusts that own lodging and resort properties are up 37% on a strong year for tourism. No. 3 is healthcare properties, up 23% as an aging population needs more medical services.
Remember, real estate sectors like data centers often heat up when there’s a shortage of specific assets. Big gains in value, plus perceptions of high demand, often get developers in a construction mood.
Not just this year
Note that the investment buzz for data centers isn’t just a 2026 story.
Data center values are up 43% from the start of 2024 through August 2026, the industry’s third-best result, and nearly double the 23% gain for all assets.
The gains were only topped by healthcare properties, up 96%, and regional malls, up 69%. Shopping hubs are enjoying a go-out-to-shop renaissance.
Trailing the pack
So, what properties will developers avoid? Well, look at which property trusts trail the pack.
In 2026, the worst places to be are casinos, down 5% as in-person gambling wanes; telecommunications properties, down 2% as cell phone growth ebbs; and timberland, down 1% amid weak construction demand for lumber.
Looking longer-term, back to 2024, the trust laggards have been timberland, down 25%; telecommunications, down 16%; and owning single-family rentals, down 4%, as the housing market weakens and regulatory concerns grow.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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