Every Gigawatt of Data Center Construction Creates 2 Million Square Feet of Industrial Real Estate Demand

By Sam Laird

Data center development has dominated real estate headlines for the past several years, driven by AI infrastructure buildout and hyperscaler expansion. But an industrial real estate story is unfolding alongside the data center boom: The sheer scale and complexity of these projects is creating substantial demand for warehouse and distribution space well beyond the data center footprint itself.

Glenn Wylie, executive vice president and head of asset management at Link Logistics, recently spoke with Commercial Property Executive (CPE) about this dynamic—how it's reshaping demand patterns in markets across the country, and what industrial owners should understand before underwriting the trend.

How much industrial real estate demand does data center construction create?

According to Link Logistics research, which Wylie shared with CPE, every gigawatt of data center construction generates approximately 2 million square feet of spillover industrial real estate demand—and roughly 80 percent of that demand is long-term, tied to ongoing operations rather than construction staging. With an estimated 100 gigawatts of data center construction currently in the national pipeline, that translates to roughly 200 million square feet of industrial demand over the next five years, or about 0.2 percent of total industrial stock annually.

Much of the conversation around data centers focuses on megawatts, transmission infrastructure and land entitlements. As Wylie explained to CPE, less understood is the industrial real estate footprint that activates around these projects once construction begins. Data centers are among the most materials-intensive built environments per square foot, requiring dense concentrations of electrical equipment, cooling systems, steel, fiber and precision hardware. That intensity creates demand for space geared toward procurement and staging—demand that flows through two distinct channels.

The first is construction staging: contractors and subcontractors storing materials and equipment before installation, alongside specialty suppliers managing hardware moving through the supply chain. Wylie told CPE that construction-phase activity represents only 15 to 20 percent of total spillover demand. The second, larger channel is the vendor and supplier network that forms around ongoing data center operations—maintenance contractors, cooling and power infrastructure vendors, and server testing and reverse logistics providers. This is the more durable piece of the demand story, and it persists for as long as the data center remains operational.

A third, related category has emerged in specialty third-party logistics. As Wylie noted in the interview, Link Logistics recently leased a 740,000-square-foot building in Columbus, Ohio, to a 3PL provider whose end customer is an AI hyperscaler, supporting storage of data center components and equipment. At the firm's Douglas Hills property near Atlanta, he told CPE, 88 percent of the space is now leased to data center infrastructure suppliers.

What makes data center-driven industrial demand different from traditional logistics demand?

Building requirements skew toward higher clear heights, heavy floor loads and robust power—dock configuration matters less here than floor load capacity and power access, Wylie told CPE. Lease terms also tend to run shorter, particularly for construction-phase tenants: A staging contractor might sign an 18- to 36-month lease rather than the five- to 10-year terms typical of logistics tenants. Location priorities shift too. Rather than optimizing for proximity to end consumers, data center-driven tenants prioritize proximity to the development site itself, along with access to the skilled labor supporting construction and operations.

Proximity requirements vary further by tenant type. Construction-phase contractors need to be near the site short-term. Vendors supporting ongoing operations—cooling, power infrastructure, engineering services, component logistics—have more geographic flexibility and can often serve sites from within a few hours' drive. One exception, Wylie pointed out to CPE: server maintenance and reverse logistics providers, where the cost of downtime is high enough that some operators require a vendor presence within the immediate vicinity.

Where is data center-driven industrial demand concentrated right now?

The markets best positioned to capture this demand, per Wylie's conversation with CPE, combine active data center pipelines with available, well-located industrial product. Atlanta and Dallas stand out as the clearest examples, with both markets seeing significant data center-related power expansion, leasing activity and existing industrial infrastructure to support it. Phoenix and Columbus have followed a similar trajectory.

The trend's geographic reach extends well beyond established tech markets, too. In Memphis, Wylie told CPE, a single hyperscaler's decision to locate there—drawn by available power and competitive costs—drove roughly 4 million square feet of net absorption and is beginning to generate its own supplier ecosystem. In Milwaukee, a $20 billion, 15-data-center campus announcement has already lifted demand from electrical suppliers and contractors. And Reno has emerged as a data center destination in its own right, with power availability, fiber infrastructure and tax incentives drawing both data center investment and the supplier network that follows. What unites these markets, Wylie said, is access to power, developable land and existing logistics infrastructure flexible enough to accommodate project-specific tenant needs.

How should owners underwrite data center-driven industrial demand?

With the national industrial real estate construction pipeline pulled back considerably—and what is being built increasingly preleased or build-to-suit—Wylie told CPE that incremental data center-driven demand could tighten availability faster than expected in markets already running lean on inventory, particularly for higher-power, higher-clear-height product. Phoenix, Atlanta and Columbus are worth watching closely given how concentrated construction activity is in those markets right now.

For owners and investors underwriting this trend, Wylie's advice to CPE was clear: Distinguish which tenants are tied to the construction cycle and which represent durable, long-term occupancy. Construction-phase staging tenants sign short leases tied to the buildout; the operations and maintenance layer that follows is where the lasting value lies. It's also worth staying precise about causality, he added. Markets like Atlanta and Dallas have deep, diversified logistics demand independent of any single catalyst—data centers are one driver among several, not the whole story. The discipline that applies to underwriting any occupier mix applies here too.

Read Glenn Wylie's full interview with Commercial Property Executive.