The $125 Billion Land Grab: How AI is Devouring Industrial Real Estate

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News Flash

Server Farms: AI's Insatiable Appetite Reshapes Industrial Real Estate

AI doesn't just need data—it needs somewhere to put it. The result? A data center construction boom that's redefining industrial real estate.

The numbers are mind-boggling. Global data center construction is projected to hit $125.6 billion by 2032, growing at a breathtaking 16.5% annually.

China currently dominates with the largest market share, propelled by cloud computing expansion and government digital initiatives. But North America and Europe aren't far behind, with the U.S., Canada, UK, and Germany all seeing substantial activity.

The AI revolution is the primary driver. Today's AI systems demand computing power that existing facilities simply can't handle. Hyperscale providers are scrambling to build energy-intensive facilities for these power-hungry applications.

This growth comes with challenges—particularly around energy. While the industry talks green, many new facilities are turning to natural gas simply because it can be deployed quickly.

And AI is Also Brining Big Investment in PropTech

Money is also pouring into PropTech like never before. June alone saw a staggering $362 million in global investments, signaling massive confidence in real estate's tech revolution.

Currently valued between $35-40 billion, this sector isn't just growing—it's exploding. Market projections suggest PropTech could hit $106.97 billion by 2032. Some analysts are even more bullish, projecting $119.9 billion by the same year.

What's driving this growth? The usual suspects: AI, big data, and IoT are transforming everything from property management to transactions. Digital-first solutions are no longer luxuries—they're necessities.

The U.S. market alone is projected to reach $22.26 billion by 2032, growing at an 11.33% CAGR. Meanwhile, Asia's dynamic real estate markets—particularly in China, India, and Singapore—are seeing a PropTech boom of their own.

The message is clear: either embrace PropTech or get left behind in the industry's rapidly evolving landscape.

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More You Should Know

• Rates Rise, Market Cools: Mortgage rates have edged upward to 6.72% following a stronger-than-expected jobs report, potentially slowing down the summer housing market due to renewed uncertainty and job loss concerns despite a recent surge in applications. [Source]

• Seller Standoff Shifts Housing Market: The housing market is experiencing a notable shift with a significant increase in delistings and price reductions, indicating a standoff as sellers opt to wait rather than negotiate, while inventory continues to grow. [Source]

• HUD Proposes Marketing Rule Rescind: The Department of Housing and Urban Development has proposed to eliminate current regulations requiring participants in FHA insurance or HUD multifamily programs to complete forms detailing their affirmative fair housing marketing plans. [Source]

• Commercial Prices Flatline: The Green Street Commercial Property Price Index held steady in June 2025, with high interest rates limiting growth to just 3.4% over the past year and maintaining a challenging environment for commercial real estate valuations. [Source]

• CRE Lending Hits Record Highs: Global commercial real estate lending pipelines reached unprecedented highs in 2025, creating significant opportunities for alternative lenders as U.S. commercial banks shift towards warehouse and loan-on-loan facilities, leading to sustained elevated yields. [Source]

• Office Vacancies Hit Record Highs: National office vacancy rates continue to climb, particularly impacting older Class B and C buildings lacking modern amenities, while demand remains strong for prime Class A properties in major urban centers like Manhattan, Miami, and D.C. [Source]

• Industrial Real Estate's Tariff Challenge: While increasing U.S. manufacturing, particularly in semiconductors, defense, and pharmaceuticals, continues to benefit the industrial real estate sector, tariff concerns are causing companies to pause expansion plans, leading to slowed development. [Source]

• Federal SALT Cap Boosted: The U.S. Senate has enacted comprehensive tax reform, elevating the State and Local Tax (SALT) deduction cap to $40,000 until 2030, while also safeguarding business SALT deductions and 1031 like-kind exchanges, and permanently extending the mortgage interest deduction. [Source]

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