Is Space the Next Frontier for Data Centers?

The explosive demand for artificial intelligence and cloud computing has led to an unprecedented data center construction boom. But as developers search for suitable land and utilities, they’re increasingly running into the same obstacles: limited power, water constraints, rising development costs and community opposition.

Those challenges have prompted the consideration of possible alternatives once considered science fiction: building, operating and maintaining data centers in space.

A recent JLL report suggested that orbital data centers could one day partner with their terrestrial counterparts by handling energy-intensive workloads such as AI training, scientific simulations and satellite data processing. While the concept is years away from reality, there has been serious consideration as to whether moving some computing capacity off the planet could help address the growing limitations of building on it.

“These are not problems that incremental efficiency gains will solve,” Andrew Batson, JLL’s global head of data center research, told Connect CRE. “Earth is becoming harder to build on, pushing operators to consider alternatives.”

Why Space?

The concept is less far-fetched than it might sound.

The International Space Station already operates computing equipment, including central processing units and graphics processing units, although on a much smaller scale than what’s now being proposed.

“The ambition and physical scale being proposed has shifted, with a single data center being larger than the entire ISS,” Batson said.

Major technology companies are already exploring orbital computing. SpaceX has filed a request with the FCC seeking approval for a constellation of data center satellites. Amazon’s AWS Ground Station is developing infrastructure that would connect Earth-based and orbital workloads, while Microsoft’s Azure Orbital and Google’s Project Suncatcher are exploring cloud connectivity and the feasibility of training artificial intelligence models in orbit.

There’s more than novelty at work. Unlike terrestrial facilities, orbital data centers could generate continuous power from solar energy, eliminating dependence on the electrical grid, backup generators and lengthy permitting processes. The JLL report cited estimates from aerospace startup Starcloud, suggesting a single 40-megawatt orbital cluster could save approximately $138 million in energy costs over 10 years compared with a similar Earth-based facility.

The Engineering Challenges

Despite the potential, orbital data centers face significant technical and economic hurdles.

One of the largest involves launch costs.

“Orbital data centers only become viable and cost-competitive with terrestrial alternatives if they fall below the $500 per kilogram,” Batson said.

Cooling also presents a unique challenge. While space eliminates atmospheric temperature swings, space vacuum also eliminates air, making conventional cooling impossible. Instead, facilities would rely on large radiator systems to dissipate heat into space, increasing equipment size and launch costs, and requiring a higher upfront capital investment.

Processing data presents another challenge. Earth-observation satellites generate enormous amounts of information that can be slow and expensive to transmit back to Earth.

Rather than sending raw data to ground stations, orbital data centers could process the information in space and transmit only the finished results through a strategy known as edge processing. Batson said that the approach is well-suited for applications that don’t require immediate responses.

Long-term viability will also depend on solving issues related to hardware upgrades and orbital debris. Equipment in space could become obsolete long before the end of its operational life, while retired infrastructure would require reliable disposal and debris-removal systems.

What It Means for Real Estate

Batson doesn’t expect orbital facilities to replace traditional data centers. Instead, he sees the two working together, with terrestrial campuses handling latency-sensitive applications while orbital facilities take on computationally intensive workloads that can tolerate delays.

This could generate new opportunities for the commercial real estate industry beyond conventional data center development. The report said investors should watch for growth in aerospace manufacturing, logistics facilities near launch sites and supporting infrastructure, while also monitoring developments in areas such as space insurance and orbital debris management.

The industry’s next major milestone may come from Google’s Project Suncatcher.

“If Google publicly confirms successful model training, publishes inference benchmarks comparable to terrestrial performance and validates cost projections within target parameters by late 2027 or early 2028, we’ll expect accelerated investment announcements from AWS, Microsoft Azure and other hyperscalers,” Batson said.

Whether orbital data centers become commonplace is uncertain. But as demand for computing power continues to outpace the practical limits of building on Earth, the question is no longer whether the idea sounds futuristic. It’s whether the economics and technology will eventually make it practical.