Jim Kerrigan brokered his first data center lease in 1998 — the same year PhD students Larry Page and Sergey Brin launched Google out of their garage in California. Three decades later, Kerrigan finds himself part of a new technological transformation.
His work has evolved from closing deals in executive conference rooms to chatting in farmhouse dining rooms. As for the real estate involved, instead of evaluating converted industrial buildings, he's now looking at thousands of acres of rural land — typically far from large populations that could compete with future data centers for power or water.
He is in the center of the artificial intelligence boom that's creating not only a new real estate asset class, but a new generation of property specialists working on what could be the largest infrastructure buildout in history.
When Kerrigan started 30 years ago, data centers were seen as an unglamorous real estate niche. Now, he says, data center brokers and developers are building prestigious careers similar to the top dogs that ruled glamorous skyscraper districts including New York City, Chicago's Magnificent Mile and Atlanta's Buckhead, and glitzy retail high streets like Manhattan's Upper Fifth Avenue.
"It's been a pretty massive change," Kerrigan said in an interview. "The first major deal I did in terms of power was 36 megawatts. These days, I'm looking mostly at land sites for projects that are most likely to generate up to two gigawatts."
That's 56 times more power than his first big deal, and it matches the output of a two-reactor nuclear power plant that can provide enough electricity to supply over 1.5 million homes for a year, the equivalent of a city the size of Los Angeles.
The industry is racing to build specialized teams amid a severe shortage of workers, as companies buy land in a frenzy to build and run AI data centers as part of investments estimated to approach a $7 trillion by 2030, according to consulting giant McKinsey & Co.
Data center evolution
Kerrigan's first major experience 28 years ago involved Frontier Communications signing a 70,000-square-foot deal that anchored what was at the time the world’s largest data center — then known as a "telecom hotel” — in the former R.R Donnelley Printing Plant built in 1912 at 350 E. Cermak Road in downtown Chicago.
In the decades since, Kerrigan, building a niche representing software and telecommunications firms, has helped launch data center practices at two of the world's biggest real estate services firms: Staubach Co., now part of JLL; and Grubb & Ellis, which later merged with Newmark.
Kerrigan in 2014 started North American Data Centers, a Chicago-based advisory firm that he still leads. Now, in his search for land he spends a lot of time with farmers, where “for some of these folks, it’s been a family farm for 150-plus years.”
Data center brokers and developers like Kerrigan zigzag across the country, walking Corn Belt farms and shuttered factories in Pennsylvania to find parcels they can convert to "powered land" for massive campuses for Amazon, Google, Microsoft and Meta.
The big tech firms are on track to spend nearly $700 billion this year alone on hyperscale data centers, power plants, computer chips and other facilities for artificial intelligence networks.
Adding in projected tech giant spending in coming years, the AI expansion investments are estimated to be bigger in today's dollars than the highway system, transcontinental railroads in the mid-1800s and the Apollo space program and moon landing in the 1960s combined.
Power professionals
Identifying sites for data centers has "many twists and turns" that require more technical expertise than a decade ago, before the advent of hyperscale centers, Ali Greenwood, Dallas-based vice chair in Cushman & Wakefield’s global data center advisory group, said in an email.
Brokers and developers now have to be quick studies in working with utilities to bring electrical hookups and onsite generators to data center sites, among other skills.
“If you had told me five or 10 years ago I'd be spending five or six hours a week on the phone with utility companies and consultants, I would have said you’re crazy,” said Greenwood, who has been in the industry for more than 14 years. "You're often at the mercy of regulated companies that have to decide how and when to grant power, and at what costs, as well as managing community pushback."
Due to the power crunch, even tenants looking to lease servers in existing colocation centers have to secure space up to 18 months ahead of time, and be flexible on location, Greenwood said.
"The market is so incredibly tight and constrained that sometimes you're going to your second or third choice because of how fast and fluid the market is," she said.
Brokers need to be well-versed in the region's utility taxes, where a fraction of a cent can make or break a location's suitability, Kerrigan said.
"If you don't have the answers to all these questions for an AWS or Meta or Microsoft, then you don't make it to call number two," he said.
Andy Cvengros, co-lead of JLL's U.S. data center practice, agreed that developing relationships with utilities to quickly identify power, water and fiber sources has become a critical part of the job.
"Many newer brokers that have never been involved in data centers are only looking at the land and power lines that are adjacent to the site," Cvengros said in an interview.
Given the power constraints, "you really have to have a buttoned-up package with zoning, utility analysis and fiber studies in the queue" before pitching a project to a developer, he added.
Community liaisons
Data center developers and architects have had to change the way they plan projects to deal with increasing community pushback and other challenges that come with building campuses that use so much power and water.
Chris Crosby, CEO of Dallas-based Compass Data Centers, said he now spends 80% of his time working with local officials and residents in communities where the firm is building projects, such as Ellis County, Texas.
"I do think it's very important for us to be good neighbors," Crosby said this month on a webcast hosted by Walker & Dunlop CEO Willy Walker. "If you're going to be somewhere for 100 years, you're going to put infrastructure in place for a very, very long period of time, you better do it well."
He added that "our social license is at risk, and we have to figure that out as an industry."
With opposition directing where and how data centers are built, developers are now approaching local officials and residents earlier in the process, often with offers to cover the cost of electrical grid upgrades or build generators to power the facilities, said John McWilliams, head of data center research at Cushman & Wakefield.
"They want to get in front of the community and see if there are potential compromises before chasing down approvals," McWilliams said. "That's a net benefit and a testament to these developers' desire to have positive community relationships."
Today's architects are starting to think more like engineers to design projects that can win community approval and support advancements in power, cooling and fiber technology, said Stanley Schultz of international architecture firm Ware Malcomb.
"My scope now includes master planning across hundreds of acres while having to work with experts in on-site power generation, water treatment infrastructure and massive fiber routing," said Schultz, who specializes in designing hyperscale data centers using up to two gigawatts of power.
Schultz, who has been in the data center industry since 2012, now looks for architects and project managers that are versed in networking and other technology.
"We are no longer designing buildings," he said. "They have transformed into city-scale ecosystems that require much more robust understanding of the data center design and planning process."
Team building
National and global commercial real estate services firms have built data center teams that include brokers with decades of industry experience in engineering and infrastructure to help plan, operate and manage projects.
Cresa, a brokerage that historically has focused on representing tenants and other building occupiers, last year hired its first team to arrange data center sales and financing. The team is headed by Michael Morris, an industry veteran who launched Newmark's data center practice 20 years ago.
AI’s rapid acceleration has created a gold rush mentality for real estate professionals, Morris, said in an interview.
“Brokers of all walks of the profession are trying to be involved,” Morris said. “The industry is moving at such breakneck speed and it is unbelievably exciting. But it can also be very challenging for the less nimble.”
CBRE, JLL, Cushman & Wakefield and other global real estate services firms are aggressively recruiting technical, utility and project management professionals such as fiber optic technicians, electrical and HVAC engineers and power grid analysts to keep up with the building boom.
A good hire blends technical facility knowledge to understand power capacity, cooling systems and fiber connectivity with lease negotiation, financial underwriting and tenant relations skills, said Matt Landek, JLL's global president of data centers and critical environments, who oversees thousands of data center employees at more than 340 facilities and projects.
The shortage of skilled data center workers has prompted real estate services firms to work with tech companies and developers in creative ways to ramp up training and hiring.
For example, CBRE and Facebook parent Meta last spring teamed to launch Level Up, a bootcamp to teach skills trades to create thousands of fiber technicians and other professionals to build and maintain the latest data centers.
Meta expanded the efforts last month, investing $115 million into a partnership with CBRE and trade group Associated Builders and Contractors called America's Workforce Academy. The program provides tuition, airfare and even lodging to train electricians, welders, plumbers, mechanics and other construction roles at Meta data center sites in Louisiana, Ohio, Indiana and Texas — with jobs guaranteed for graduates.
America's Workforce Academy is open to qualified military veterans, recent graduates and other people entering the trades from other careers across the country.
JLL's Landek taps veterans and other sources to recruit engineers, technicians and construction workers from such industries as oil and gas and telecommunications.
"Navy nukes" — sailors and officers responsible for operating and maintaining nuclear reactors that power the Navy's fleet of aircraft carriers and submarines — are among Landek's most prized hires.
Training and hiring locally goes a long way toward winning trust and securing approvals for data center projects, Landek said.
“If I just import 500 people into West Texas, that's not going to suit the local community very well,” Landek said. “We have training programs and more are coming down the line soon, to bridge that talent gap.”
The speed at which the data center industry is reinventing itself demands a broader skill set and continuous learning to guide clients through the complexities of facility development, Ware Malcomb's Schultz said.
Cresa's Morris noted that as with all previous land and mineral rushes, not all prospectors will strike it rich.
"There is an outrageous number of sites for sale and available," he said. "Zeroing in on the ability to get entitlements and committed power are the biggest hurtles in closing deals."