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5 Reasons Data Centers May Have Been a Risky Investment in 2025

Data centers drew strong investor interest in 2025, but power access, development risk, capital requirements, limited asset sales, and project-specific underwriting complicated the investment case.
From TheFinanceBase Team6 min to read
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Data centers had powerful demand and scarcity signals in 2025, but those signals did not guarantee attractive returns. Power access, construction execution, capital requirements, limited asset trading, and project-specific underwriting all created risks. This is a retrospective on the 2025 investment case, not a claim about 2026 conditions or the realized returns of every data-center investment.

What the 2025 market figures do—and do not—show

CBRE’s North America Data Center Trends report for H1 2025 showed a tight market: primary-market supply grew while vacancy remained low, much of the construction pipeline was already committed, and asking prices increased. These conditions supported the demand case, but they do not establish what a particular project cost to build, whether it secured power on time, or what return its investors earned.

Measure Reported result Scope and qualification
Primary-market supply 8,155 MW, up 43.4% year over year North America, H1 2025; CBRE Research and CBRE Data Center Solutions
Primary-market vacancy 1.6% North America, H1 2025; CBRE Research and CBRE Data Center Solutions
Under-construction capacity preleased 74.3% North America, H1 2025; CBRE Research and CBRE Data Center Solutions
Average asking rates for 250–500 kW requirements Up 2.5% North America, H1 2025; CBRE Research and CBRE Data Center Solutions
Pricing for requirements of 10 MW or more Up as much as 19% In specific North American markets in H1 2025; CBRE Research and CBRE Data Center Solutions

Those figures describe market supply, vacancy, commitments, and asking prices—not completed investment returns. Low vacancy can support leasing prospects, but it cannot by itself resolve delivery risk, operating costs, financing terms, asset valuation, or the creditworthiness and lease terms of a particular tenant.

1. Power access can make or break a project

A data center needs more than a suitable building site: it needs enough electricity, delivered on a schedule that works for construction and tenant operations. CBRE said power availability and infrastructure delivery timelines were among the most decisive factors shaping site selection, leasing activity, and pricing across major U.S. markets in H1 2025. JLL’s 2025 global outlook likewise described transmission constraints as a source of multi-year delays and noted that AI workloads were increasing power-density requirements.

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That creates a gap between demand for computing capacity and the amount of capacity a developer can actually bring online. A project may face delays while transmission or other power infrastructure is built or upgraded. If delivery takes longer than the underwriting assumes, construction capital may be tied up for longer, and planned leasing or revenue may be pushed back. Strong demand does not guarantee a project receives the required power at the expected time or cost.

JLL’s 2025 outlook forecast that global data-center energy demand would double over five years to 100 GW. That is a forecast with a five-year horizon, not a confirmed outcome; it points to the scale of expected demand while also underscoring why power infrastructure is central to feasibility.

2. Development exposes investors to delays and cost overruns

Building or expanding a data center involves coordinating construction with power delivery and other infrastructure. A delay in one can disrupt the project schedule as a whole. That matters especially when the investment thesis depends on completing a facility and securing a tenant within a planned window.

JLL’s 2025 commentary said developers had communicated a possible tariff-related increase in construction costs. This was an estimate reported in that discussion, not evidence that costs rose by a particular amount across all projects. For investors, the relevant question is whether a specific project’s budget and contingency can absorb cost changes without undermining its expected return.

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JLL projected that about 10 GW of global capacity would break ground and 7 GW would reach completion in 2025, representing roughly $170 billion in asset value requiring financing. These were 2025 outlook estimates, not confirmed year-end results. They illustrate the scale of development and financing activity anticipated, not the profitability of the projects involved.

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3. The sector requires specialized capital and technical expertise

Data centers are not simple property investments. JLL describes them as highly technical and capital-intensive, with significant barriers to entry. Investors need to assess infrastructure and power requirements alongside the usual property questions, while development projects also require substantial capital before the asset is operating.

JLL identifies development financing as a primary route of exposure and private equity as a significant source of development equity. That does not mean an individual investor can readily buy a facility or that any particular indirect investment is suitable. The form of exposure affects how much control an investor has over a project and how directly its results depend on construction, power delivery, financing, and tenant arrangements.

Route What the exposure can involve Questions to check
Direct ownership Ownership of a facility or interest in a specific asset; exposure is tied closely to that asset’s operations and leases. How much capital is required? What are the power arrangements, tenant terms, operating obligations, and options for selling the interest?
Development financing Capital committed to a project before or during construction; outcomes can depend on project delivery, costs, and financing structure. What happens if power or construction is delayed? Who bears additional costs? What are the repayment, priority, and completion terms?
Indirect or public-market exposure An investment in a vehicle or company that may have data-center exposure, potentially alongside other assets or business activities. How concentrated is the exposure? What fees, liquidity terms, valuation method, and underlying assets apply?

These are general due-diligence questions, not an endorsement of a particular investment vehicle. The 2025 market reports cited here do not establish the fees, access rules, holdings, or suitability of any specific retail product.

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4. Few asset trades can make exits harder to judge

JLL says relatively few data centers trade each year. Limited deal flow can make it harder to infer a current sale price from recent comparable transactions, and an owner who wants to sell may not find a buyer on the desired timetable or terms.

CBRE reported that North American data-center asset sales were less than $1 billion in H1 2025, down more than half year over year. It attributed delayed investor decisions to economic uncertainty, geopolitical conflict, and power constraints. That half-year slowdown does not by itself show that the assets were impaired or predict trading for the rest of 2025; it does show why investors should not assume an easy or timely exit.

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5. Strong sector demand can hide concentrated, project-specific risk

CBRE’s 2025 survey of 92 major investors showed strong interest in the asset class, but respondents also identified constraints and gravitated toward strategies whose results depend on specific projects and tenants.

Survey finding Result How to interpret it
Planned to increase data-center investment in 2025 95% Investor intention, not an observed return or a guarantee of success
Named regulation and power availability as the greatest challenge to their current strategy 39% Respondents could identify major challenges; this was the most frequently reported challenge in the cited figures
Named debt availability as the greatest challenge 10% CBRE’s survey result; financing conditions can matter alongside power and regulation
Favored opportunistic new-development strategies 62% A stated preference, not evidence that development outperformed other strategies
Preferred core stabilized assets 7% A stated preference among surveyed investors
Selected hyperscale build-to-suit as a leading opportunity over the next 12 to 24 months 49% A forward-looking investor view, not a performance result

Survey preferences are not a substitute for evaluating a project. A development or hyperscale build-to-suit opportunity can still depend on local power capacity, delivery timing, capital needs, construction costs, and the tenant’s lease commitments. Broad demand figures do not establish the likely return on a particular asset.

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How to assess a 2025 data-center investment thesis

Because the market statistics describe broad conditions rather than the economics of a named asset, an investor would need project- or vehicle-specific information before judging its risk and return. Useful checks include:

  • Power: Is the required capacity available, contracted, and expected to arrive on a schedule consistent with the project plan?
  • Delivery: What infrastructure work remains, what could delay completion, and who bears the financial consequences of a delay?
  • Costs and capital: What assumptions underlie the construction budget and financing plan, and how would higher costs or delayed financing affect the investment?
  • Tenant and lease: Who is expected to occupy the facility, what are the lease terms, and how do those terms affect revenue and risk?
  • Valuation and exit: What supports the purchase valuation, and what evidence is available about likely liquidity and sale terms?
  • Investment structure: What fees, concentration, liquidity restrictions, and investor protections apply to the specific route being considered?

The cited 2025 market reports and investor survey do not establish current valuations, project-level power contracts, tenant credit, lease terms, or risk-adjusted returns for a named asset or vehicle. Their figures are historical and should not be treated as 2026 market statistics.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

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