Protests against the construction of AI data centers are increasing, driven by concerns over land use, energy consumption, and noise. A recent NBC News poll indicates that 69% of respondents oppose these developments in their communities.
With over 4,700 data centers already in the U.S. and spending projected to reach $1.8 trillion by 2050, some states are enacting legislation to limit new projects, including a moratorium in New York. Amid this backdrop, real estate investment trusts (REITs) that own and lease data center space are positioned to benefit.
Mizuho analyst Vikram Malhotra noted that while new projects may face delays, existing data center REITs could gain pricing power due to rising demand for computing resources. Data center REITs represent 13% of the $1.5 trillion U.S. REIT market, with major players including Digital Realty Trust, Equinix, and Iron Mountain.
Equinix, valued at approximately $102 billion, has seen a 37% increase in stock price this year, while Digital Realty Trust and Iron Mountain have also reported strong performance.
Analysts from Wells Fargo and Green Street suggest that while permitting restrictions could slow future growth, established companies like Equinix and Digital Realty have the resources and relationships to adapt and thrive.
Overall, the current environment may enhance the value of existing data centers, making these REITs an attractive investment option despite their higher valuations compared to other REITs