The development deal: Structuring from site to scale

A data center can generate millions in annual property tax revenue, which is why data centers are transforming markets that were long overlooked. Tori Becker explains how to structure a data center deal around the site.

Her advice is to start due diligence early, because a good site is what you build the deal around. She said that the biggest real estate challenge is entitlement uncertainty. Many zoning codes have not caught up with data centers, so rezoning or a conditional use or special use permit can take six months to a year or longer, while the operator works to a critical timeline. Conditions precedent and option agreements let a developer pursue approvals while allocating the risk if the entitlements do not come through.

Tori also recommends building the right team from day one and working with municipal authorities early. Developers are often expected to fund infrastructure upgrades, so cost-sharing and reimbursement mechanisms matter. And when community benefit agreements are structured correctly, a data center can be attractive to the community.