Data centers have cemented themselves firmly into real estate and infrastructure portfolios, alike, as they have come to occupy a unique position at the intersection of the two asset classes.

On the real estate side, the attraction of data centers lies in the powered shell — the physical property that houses the IT equipment. Investors in real estate view data centers as high-demand assets that offer stable income streams through long-term leases with tenants who equip and operate them. To industry participants, the primary value lies in the location, land, size, utilities provided and tenant base. In a recent paper, the real estate arm of Principal Asset Management called data centers “a smart diversification strategy due to low correlations to other assets” within a broader real estate portfolio, with “a favorable risk/return profile.”

Infrastructure investors, on the other hand, view data centers as mission-critical assets akin to a utility, and they are m