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4 Ways Data Centers Are Impacting the Real Estate Industry

By: Kayla Matthews on May 6, 2019

Thanks to the internet and the growing number of people who depend on it to research and handle other essential tasks of life, it's difficult to find a sector untouched by the influence of data centers.

Although industries like retail and esports often come to mind when people think of data center dependence, data centers influence the real estate market, too.

1. Real Estate Professionals Use Data-Driven Tools to Make Decisions

Before data analytics and artificial intelligence came to the forefront, real estate investors or agents relied on experience and gut instinct when determining specifics like when and where to buy property and how to best market homes for sale. Now, they can use high-tech tools to find investment properties, households most ready to sell and other metrics.

Remine is one such tool with those features. People can search by property, neighborhood, ZIP code and school zone. Plus, the tool tracks all of real estate agents' past transactions and keeps tabs on their current leads. That means the longer a real estate professional uses the platform, the more the compiled data grows.

Since real estate agents have options like Remine to use, they become more dependent on data centers. Many of them may not think of the role data centers play in helping analysis platforms work. They simply feel thankful that it's so simple to pull up the information they need in seconds and use the insights to make more confident decisions.

2. Data Center Prospects Turn Some Cities Into In-Demand Real Estate Markets

Some cities become desirable places to invest or live based on things like excellent educational and medical facilities, beautiful scenery or above-average cultural offerings. Those things come into play in many cases. However, when investors look for places to build new data centers or acquire existing ones, some markets stand out more than others.

In the United States, one of them is Northern Virginia. That's due in large part to Amazon's data centers located there, but statistics also show the number of individual data center leases rising, too. More specifically, those leases grew from 10 megawatts to 70 megawatts in just a few years.

Also, the seven primary data center markets in the United States accounted for 303 megawatts worth of net market absorption in 2018 — more than 16 percent more than 2017's then-record-setting total.

Due to the vast segments of land required for the most sizeable data centers, the clients interested in investing by building new ones often scout out real estate markets for months. Most clients want large amounts of land, plus a local labor market that can support the new data center — among other things.

As some markets become exceptional hot spots for data centers, the appeal has a broader impact on the real estate market at large, as well as the people working in it.

3. Data Centers Indirectly Help Consumers Research Where to Live

One real estate trend that’s grown even more popular in recent years is the amount of research people will do before deciding where to move. If they learn that a potential location doesn't match the lifestyle they want, they may not move there. It's also helpful that today's consumer-facing real estate sites are incredibly lifestyle oriented.

At Zillow, one of the leading real estate sites, people can see the interior and exterior images of homes, plus satellite images and map views. It's not surprising, then, that Zillow processes more than 3 million new photos daily and receives 17,000 image requests per second during peak usage times. Zillow is an Amazon Web Services (AWS) client, and representatives of the brand knew it needed a powerful data center provider to keep up with demand.

Without the computing capabilities data centers provide, couldn't see such large assortments of images with a few mouse clicks. Data centers also allow for cloud storage of user data. For example, a person can keep track of which properties they look at online and view content on any of their devices.

Benefits like these need data centers to work. If data centers were not in the picture, people might still be primarily looking for places to live by picking up printed home rental guides or showing up to look at properties without seeing them first.

4. Data Centers Becoming Popular for Diversifying Real Estate Investment Portfolios

Data centers belong to a relatively young asset class, but investment analysts assert that real estate investments are moving into the mainstream. So, when investors want more diverse real estate platforms, they're increasingly likely to consider investing in data centers. That's because data centers offer the potential for a high return on investment (ROI) and the chance to attract high-caliber tenants.

Many of those tenants sign leases for a decade or more, which lets investors look forward to consistent revenue during the period. Plus, as mentioned earlier, data centers are becoming crucial for even less tech-centric industries. Investors can notice that trend and conclude it shows no signs of ceasing.

Interesting Trends Abound

This list shows that data centers impact the real estate sector from consumer and real estate professional standpoints, as well as furthering investment plans. As data center sizes and overall data usage go through shifts, the real estate industry may see further changes.

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