Data centers pull industrial demand into their orbit

The data center construction boom has started to show up in leases signed five miles away, and CoStar Group's numbers, reported by Connect CRE, give the spillover a precise shape: occupiers tied to data centers now account for more than 6% of leasing activity across logistics properties within that radius, up from less than 3% in 2020. A 6% national share is still small, but doubling in four years suggests the demand is beginning to behave like infrastructure demand rather than a tenant category.

The tenants doing the leasing are the same firms doing the building: CoStar counts construction firms, power and cooling equipment suppliers, and operators and IT infrastructure providers among the occupiers driving the share. National data center inventory has reached roughly 69 GW of existing capacity, with another 43 GW under construction, and that much power under development requires more than the buildings themselves—substations, transmission lines, and the equipment that moves electricity from the grid into the server halls.

Juan Arias, CoStar's national director of industrial analytics, said operators increasingly prioritize locations with access to new electrical generation, substations, and transmission infrastructure as they bring capacity online. The result, he said, is that demand now extends beyond the data center buildings themselves and into the broader supply chain required to construct and operate them.

The five-mile ring captures the logistics properties close enough to serve a data center's construction and operation, and the national 6% figure almost certainly understates what is happening in markets where the most capacity is under construction. The 43 GW in the pipeline will determine how far the spillover spreads and how quickly underwriting moves from square footage to substation access.

For industrial owners within five miles of a data center, the tenant list has quietly expanded beyond e-commerce and third-party logistics to include the supply chain for the megawatt—a different underwrite entirely.