Beyond Data Centers, AI Drives Industrial Demand

The artificial intelligence boom is not only leading to a proliferation of data center development. It’s also driving industrial demand for space near data centers and transforming how warehouses are designed and used, CBRE Research says in a new report. Part 3 of of a four-part series on AI and commercial real estate, the report says the proliferation of data centers and the rise of AI warehouse automation are changing what occupiers need.

“Companies that build, supply and service data centers want to be close to data center operating clusters”–groupings of 11 or more facilities within about two miles, the report states. “Within these clusters, tech tenants sign nearly twice as many leases as they do elsewhere (13.9% vs. 7.1%) and specialized R&D tenants nearly double their contribution (35.0% vs. 19.0%).”

From a landlord’s perspective, industrial space near 11-facility data center clusters commands rents approximately 6.8% higher than comparable space elsewhere, rising to 9.8% near clusters of 21 or more data centers. “Almost no new supply is being built inside these areas, so this rent premium is durable,” says CBRE.

Where new industrial construction is concerned, taller ceiling heights of 40 feet or more are essential to accommodating automation, robotics and AI-guided operations, the report states. So are robust electrical capacity and layouts built for machines.