The artificial intelligence revolution is moving at breakneck speed. Yet the markets for land and buildings essential to powering the expansion remain surprisingly opaque.
Finding accurate data in the highly competitive data center sector takes a seasoned team that can broker confidential information as well as handle the full lifecycle of complex property deals. Michael Morris, an industry veteran who launched Newmark's data center practice roughly two decades ago, is looking to build that same high-power business at Cresa, a national brokerage that historically has focused solely on representing tenants and other building occupiers.
"What's unique about the data center industry is that it's a completely inefficient real estate marketplace," Morris said in an interview with CoStar News. "There's no transparent data in the public domain about building availability, power rates, transaction terms or conditions."
To find and interpret reliable data in real estate's hottest but most secretive sector, Morris taps his experience doing more than 1,000 data center sales, leases and development projects across the globe over more than 25 years in the industry. He spends much of his day talking to contacts across the globe — utility operators, engineers, local planning officials and tech executives.
"What's unique about the data center industry is that it's a completely inefficient real estate marketplace."
From coast to coast and beyond, Morris and his team piece together information on land, water and power availability, electricity substation latency, local zoning laws and potential community resistance to projects.
"It's an extremely information-sensitive industry, and you really need to be involved with all types of transactions to fully understand the market," Morris said.
Morris was lured by the chance to launch another full-service data center business and build a team at Cresa. Over the past two years, the firm has aggressively expanded beyond its tenant-rep roots by hiring and buying companies in data analytics, project management and national tenant portfolio management.
Morris, who works in Cresa's Manhattan offices and lives in Westchester, brought Newmark colleagues Sumner Putnam and associate Matt Deutsch with him to Cresa. He has already hired more than a half-dozen professionals since last summer and plans to add up to 15 more this year.
Dot-com beginnings
Morris started his real estate career during the dot-com boom that followed the Telecommunications Act of 1996, a landmark federal law that broke the monopoly of national long-distance telephone companies and fueled the explosive growth of the internet.
The law deregulated the industry and spurred competition between cable companies, long-distance providers, local phone companies and internet providers. Those firms and others raced to build massive fiber-optic networks, with data centers as hubs for high-speed voice, data and video transmission.
"I've always had a deep interest in technology and I was quickly excited by the buzz around the evolution of the internet," Morris told CoStar News. "From the first, I knew this was the sector I wanted to focus on."
Morris founded Newmark's data center practice about 20 years ago — around the time that Google launched the world's first hyperscale data center in northern Oregon to handle the explosive growth of internet search traffic and the need for massive data storage.
Over the decades, he's worked with every major hyperscale operator and led projects for such clients as telecommunications giant Verizon and data center operators Digital Realty Trust and CyrusOne.
Morris said he's building a team at Cresa that's versed in understanding all aspects of transactions. The firm handles leasing, sales and financing of finished data centers as well as development sites across the country, and Morris also sources leads and market information through longtime contacts with data center experts at Cresa's global partner Knight Frank.
The opportunities are massive, but brokerage teams need to be nimble and well-connected in the industry, Morris said. The national data center boom has sparked land sales and construction as tech giants such as Amazon, Meta, Microsoft, Google, ChatGPT parent OpenAI and others build networks geared to power artificial intelligence. Amazon alone plans to spend $200 billion on data centers and related equipment this year.
Morris learned 20 years ago when he launched Newmark's team that a "soup-to-nuts" approach to providing services across all phases and types of projects is necessary to navigate the often-blurred lines between landlords, tenants and builders of data centers and power infrastructure.
Buyers, sellers and their brokers are at a big disadvantage unless they're deeply involved in the sector and have networks with access to local power rates, land-use regulations and other data, he said.
"Data center occupiers are sometimes also the developers and owners," Morris said. "That's different from traditional real estate, where those roles are usually well defined."