Real Estate Bets Big on Data Centers

Artificial intelligence is transforming industries, automating complex tasks, analyzing data faster and helping businesses make smarter decisions. Its impact extends beyond operations — reshaping the very markets where industries set up shop.

As AI-driven infrastructure demands surge, data centers have become some of the most sought-after investments across North America.

Related Companies this week announced it’s looking to raise up to $8 billion to develop data centers, starting in Ontario, Canada, with additional projects planned in Illinois, Missouri and Wyoming.

Illinois comes as no surprise, as Chicago’s suburbs have become a national hotspot for data center investment.

Rural towns are embracing massive projects for the asset class, despite the environmental impact — including a 340-acre Equinix facility that will require as much electricity as half of Chicago’s households and 3 million gallons of water daily. The tradeoff? A major boost in jobs and tax revenue.

Closer to the city, the O’Hare corridor has become one of the most competitive data center submarkets in the country. Stack Infrastructure recently paid $42 million for land in Elk Grove Village, while Digital Realty and EdgeConneX continue expanding their presence. Elsewhere, data centers are replacing planned housing and office developments — like a 1,000-home project in Hoffman Estates scrapped after a developer offered $45 million for the land.

San Francisco has been riding the AI wave for years, fueling an office market rebound as AI firms snap up workspace. Swig Company recently signed two AI tenants in SoMa, adding to last year’s 86 AI office leases in San Francisco. San Jose is following suit, with Santana Row emerging as an AI hub.

Miami, on the other hand, has struggled to sustain its push to become the next Silicon Valley. After an influx of tech companies in 2021 and 2022, many AI startups and venture capital firms have returned to the Bay Area, citing better access to talent and resources. The shift has shrunk South Florida’s tech office footprint from 4.9 million square feet in 2021 to just 3 million today.

Despite the departures, Miami’s boosters insist the tech scene remains viable, pointing to leases from major players like Spotify, Sony, Amazon and Apple.

In Texas, firms are making big AI infrastructure bets. Apple is investing in a 250,000-square-foot AI server manufacturing facility in Houston as part of a $500 billion U.S. initiative. This follows Trump’s announcement that OpenAI, Oracle and SoftBank will launch a major AI infrastructure investment — starting in Texas.

AI continues to be a dynamic force in real estate. In some markets, it’s revitalizing office leasing; in others, it’s driving demand for data centers and industrial spaces, reshaping the environment in the process.

Outside of the surge in data centers, there was plenty of other news this week. NAR made a decision on its Clear Cooperation Policy, a Boca Raton luxury realtor is facing multiple lawsuits and developers shared some of the pitfalls they face with office-to-resi conversions.

NAR to keep Clear Cooperation Policy — with a twist

The National Association of Realtors announced it will maintain its Clear Cooperation Policy — but with an important distinction. NAR, which for months has been deliberating the fate of CCP, opted to keep the policy but with an exemption that allows sellers to withhold listings from syndication for a set period of time.

Luxury realtor in Boca Raton at center of lawsuits, state investigation

Boca Raton luxury agent Marcy Javor is facing multiple lawsuits from former clients and a state investigation over allegations of fraud and misleading marketing practices. Clients accuse Javor of misrepresenting herself as a broker, altering contracts without disclosure, falsely claiming buyers were lined up and publishing inaccurate property details.

Chasing the office-to-resi boom, some developers go bust

Developers rushed in to transform office buildings that were emptied out by the pandemic. But a project that looks good on paper can soon get out of hand, some found. While it’s true that developers in cities from New York to San Francisco are successfully moving forward with conversion projects, the failed redevelopments highlight the unique difficulties that come with transforming underused office buildings into apartments.

“Con-job disaster”: Tal Alexander, Official sued over Soho penthouse rental

Former top broker Tal Alexander and his firm, Official Partners, are being sued for allegedly defrauding the owners of a Soho penthouse out of $400,000 in a botched rental deal. The lawsuit claims Alexander and entrepreneur Daniel Fine submitted a forged bank statement to secure Fine’s lease at 54 Thompson Street, despite concerns about his credit score and business history.

Rialto goes after Daryl Hagler in foreclosure action

Rialto Capital has found a new target in its aggressive pursuit to foreclose on borrowers of Signature Bank loans. Rialto launched a foreclosure against Daryl Hagler’s Cigar Factory creative office building in Astoria. Rialto alleges Hagler defaulted on a $20 million loan in October 2024.

Domino effect: Surge in trophy home sales brings spotlight back to Miami Beach

Five years ago, a $120 million home sale in Miami Beach would have been unthinkable. Then came the pandemic, supercharging the market across South Florida. Billionaire hedge fund manager Ken Griffin discovered Miami. Home prices surged. The demographic got younger and wealthier. And then, sales slowed a bit. Sellers were chasing numbers that were no longer realistic. Yet, the market for waterfront homes — and land — is back, surging in recent months.

Naftali scoops up Spitzer’s UES rental building for more than $800M: report

Eliot Spitzer is reportedly in contract to sell a big Upper East Side rental building to one of the neighborhood’s condo kings. Developer Miki Naftali is reportedly in contract to buy Spitzer’s 800 Fifth Avenue rental tower for more than $800 million, Bloomberg reported.

Google’s landlord lists tech firm’s Venice campus for sale

The iconic Google-leased Binoculars Building in Los Angeles is hitting the market as its landlord, Net Lease Office Properties, is listing the property off the Venice Beach Boardwalk. The 78,600-square-foot office, currently occupied by Google under a lease expiring in 2030, is being marketed by CBRE, though no asking price has been disclosed.