It’s possible that if Republicans fall in the Senate this week, the issue of sleeping with voters will take center stage.
As in politics, defeat is rarely about a single issue. Open questions like Iran and tariffs and extremely high interest rates will all have their fingerprints on the outcome of the election. Still, an issue that wasn’t on anyone’s political radar 12 months ago — but is now underwater at 30 percent in recent polls — is the data center.
It is also a real estate asset class that has grown in popularity throughout the US
Last year, approximately $121.91 billion in credit was added to data centers, according to S&P Global Ratings. From the first quarter of 2025 to the first quarter of 2026, 33 percent more data center inventory was added to the market (according to a report from CBRE earlier this year) but, at the same time, the vacancy rate in the operating center has been at an all-time high.
The tightest market of all – came to 0.3 percent vacancy at the beginning of the year – is Northern Virginia, which is home to Loudoun County, which itself hosts more data centers than anywhere else in the known universe.
There are some 253 data centers in Loudoun, spanning 49 million square feet and accounting for a quarter of all data centers in the entire state. (The name of the area “Data Center Alley” seems strange.)
Plus, the wealth in the data center has turned into real wealth – Loudoun has a median household income of $170,000 per year, making it the wealthiest county in America.
CO visited several county data centers, spoke with opponents and lawyers, identified some of the players in the space, traced the history of how Loudoun became Data Centerville USA, and tried to understand how this asset class became so unpopular.
“Some of the [the popular distrust] based on lies,” said Hossein Fateh of CloudHQ, which has been developing data centers since 2000, including in Loudoun, and is our Sit-Down. Critics “talk about water use. Fifty percent of the data center built has zero consumption, because it is a closed water loop. It’s like the radiator in your car. In Chicago, we have the largest data center I’ve ever built, with an IT load of 240 megawatts. Use of water in an adiabatic system [which uses water evaporation to cool the center] the same amount as one golf course hole per year.
Of course, if data centers follow the same trajectory as other technologies, they will eventually become smaller and more efficient, negating problems like water consumption altogether – and someone is already working on an interesting proposal.
Jeff Thramann, for example, is a neurosurgeon and inventor who started a data center company called LT350, which aims to put smaller data centers on parking lot roofs!
Thramann looks “at customers in the co-location model – think hyperscalars, neo cloud, frontier model lab – they are all trying to get closer [to users]but the question is: Where can we put these things so close?” he said. “And we think we have the solution.”
And, although many data centers can now be found in Loudoun, it’s not like there aren’t alternative locations – including south of the border, where some hyperscalers are headed.
Querétaro, about a three-hour drive from Mexico City, is experiencing a rush of data center development. (In Mexico, Querétaro is even more dominant than Loudoun County in America – about 72 percent of the country’s operational capacity can be found there.)
“There are some big projects coming up, but it’s quickly becoming a cloud area for Mexico,” said John McWilliams of Cushman & Wakefield. Querétaro “has the opportunity to position itself not only as a major player in Mexico, but in the hemisphere.”
If the situation in the data center ends up changing after Tuesday, at least there will be room for data center developers.
Class in
As politicians await the midterms, last week saw a deluge of Q3 earnings – and the takeaways were mixed.
Vici Properties took a 55.1 percent hit to funds from operations and $458 million in credit losses expected for the quarter. Of greatest concern to the REIT is the acquisition of Caesars (Vici’s largest tenant) by Fertitta Entertainment, which could throw all the uncertainty into Caesars’ lease terms. That being said, total revenue exceeded expectations.
Blackstone Mortgage Trust suffered a net loss of $327.6 million in income, which was more than four times the second quarter losses.
“Looking ahead, as we consider the potential impact of higher rates, we believe we are well positioned,” said BXMT President Austin Peña. (Oh, yes. Rates are staying where they are, and may be going up.) “We’ve repositioned our portfolio significantly, and our investment channels are more diversified than ever.”
Alexandria Real Estate Equities reported a net loss of $638.5 million (which was more than double last year’s third quarter loss). That said, Alexandria is under contract to sell 421 Park Drive in Boston for about $136 million – and, in KKR’s earnings call later in the week, KKR announced it bought a 49 percent stake in Campus Point by Alexandria Megacampus in San Diego.
Most of the other incomes we hear are pretty good.
When the legal world reels from the unexpected expiration of Weil, Gotshal & Manges, this can be a lot of redound for landlords to benefit from BXP because nearly 400,000 square meters of BXP’s General Motors Building can only move on the market.
“The average office rent at 767 Fifth is under $150 per square foot,” BXP president Doug Linde said on the earnings call. “There’s a big gap between the rent space in the General Motors Building and where we believe and understand the market.”
BXP also boasted a 4.6 percent bump in revenue reported to $911.4 million, and both Washington, DC, sales to $155.4 million and $150.3 million.
Newmark saw an even bigger jump – 12.7 percent – bringing total revenue to $973.2 million, which CEO Barry Gosin will launch, which will put the company on track to have its best year yet. (That’s what we call going out on a high note!)
JLL also reported double-digit revenue growth (12 percent to $7.3 billion), paid off several hundred million dollars in debt, and launched a 500 million dollar repurchasing program. (Oh, not on the phone, but Angela Gentry was promoted to market leader in New York.)
At Invesco, revenue rose 16.5 percent and the company announced $1.5 billion in preferred stock repurchases.
Rexford Industrial Realty sold about 5.5 million square feet of industrial space valued at about $1.3 billion, and leased about 3.74 million square feet (a big increase from the second quarter’s 2.1 million).
And for the owner of the largest senior housing in the country – Welltower – profits were taken up 24.6 percent and the company did a dizzying $21 billion in investments so far this year.
Florida broke a new record
We were all set to crow about Fortune International Group and Château Group’s massive $463 million construction package loan for St.
But then Fortune International Group, along with Kar Properties this time, broke the Florida record for nabbing the largest construction loan in the history of the state – $817 million – for Faena-branded 217 condo units they were building at 24 Southwest Fourth Street, owned by Adi Chugh’s Tyko Capital.
Extell keep truckin’
Just when we notice that we haven’t heard from the likes of Gary Barnett in a few weeks, he dazzles everyone with his signature one-two punch.
Last week, they shelled out $24 million to secure 87,000 square feet of air rights for a planned office tower at 570 Fifth Avenue across from St.
And, in Times Square, Barnett signed Hyatt Hotels’ StandardX to become Extell’s hospitality brand in a 60-story, $1 billion-plus supertall called the Torch, designed by Oda at 740 Eighth Avenue. StandardX will manage 1,800 rooms in the hotel part of the mixed-use building.
Rest in peace
Finally, tragically, CO was shocked and saddened to learn that Lauren Maturo, vice president of marketing at RXR (and daughter of company President Mike Maturo), died in a car accident last weekend at the age of 32.
“Lauren has – and will always be – an indelible place in so many of our hearts,” said RXR Whitney Arcaro. “He is not only a gifted colleague, but an invaluable person. His generous, perceptive spirit, sensitive soul and creative spirit bring warmth and light to all who enter and exit RXR.”
CO worked with Maturo to create the Commercial Observer Women Event, and we interacted with them on several occasions to secure interviews and coordinate events. We witnessed that spirit, that passion and warmth firsthand. He is also in our hearts.
Talk to you next week.