The Next Frontier in Data Center Real Estate? Space

Elon Musk plans to go where no data center has gone before: space.

Musk’s SpaceX and Google are discussing a rocket launch deal that could serve both companies as they seek to put data centers into orbit, the Wall Street Journal reported. Google is also negotiating with other rocket launch companies.

Both aspire to put data centers into space, a technology entirely unproven. Nevertheless, it’s one Musk has talked about to investors as a SpaceX IPO looms.

SpaceX filed an application with regulators this year to launch up to 1 million satellites to support its orbital data centers. Anthropic expressed interest in working with SpaceX on orbital data centers as part of a separate agreement with the company.

Google already announced plans with Planet Labs to launch a satellite prototype by next year. Google Chief Executive Officer Sundar Pichai previously said he had “no doubt … that a decade or so away, we’ll be viewing it as a more normal way to build data centers.”

Many in and outside of the data center sector are looking at more sustainable data center production, considering the growing obstacles the industry is facing on Earth.

Investors are demanding greater disclosure on site-level water usage and energy consumption to mitigate growing financial and environmental risks.

Local opposition is also increasing due to concerns over strained water supplies, rising power costs and land use, leading to project stalls and legislative actions such as proposed construction moratoriums.

But there are plenty of issues that would arise with data center development in space, too, starting with whether or not the technology actually proves to be feasible and effective. There are also likely geopolitical concerns that stem from the lack of borders beyond terra firma.

For real estate investors, however, there could be yet another place to park spaceship loads of cash.

— Holden Walter-Warner