by: Ivan Rubio

Investor interest in data centers and cold storage has accelerated in recent years. Once viewed as niche property types, they are increasingly becoming core components of institutional portfolios. Demand for digital infrastructure, supply chain modernization, and reliable long-term income has pushed these assets into the spotlight. Strong fundamentals, high barriers to entry, and resilient tenant demand position both sectors as attractive options for investors seeking durable returns amid continued volatility across traditional commercial real estate. Lever Capital Partners supports sponsors pursuing these opportunities by arranging flexible capital solutions for complex and specialized property types.

Digital Infrastructure and Modern Logistics: Twin Engines of Growth

Rapid growth in data usage, cloud computing, and ecommerce continues to drive demand for specialized real estate. Industry data highlights the strength of this trend. CBRE reports that average vacancy rates in primary data center markets fell to a record low 2.8 percent, while preleasing rates for new construction reached record highs in 2024.

Data centers underpin the digital economy, supporting everything from AI applications to streaming services. Cold storage facilities play a similarly critical role in logistics, serving grocery distribution, pharmaceuticals, and temperature-sensitive goods. In both cases, the underlying demand is structural rather than cyclical.

These asset classes share a key characteristic: they are mission critical. Tenants cannot tolerate disruptions in data processing or temperature control, making them more willing to sign long-term leases and absorb higher rents. At the same time, limited developer expertise and high capital requirements restrict new supply. This imbalance supports stable performance, predictable cash flow, and strong pricing power for experienced owners.

Diversification and Institutional Appeal

As office and certain retail segments continue to face headwinds, institutional investors are increasingly allocating capital to alternative property types. Deloitte notes that the value of alternative assets within commercial real estate portfolios has grown by approximately 10 percent annually since 2000, with expectations for continued acceleration.

Data centers and cold storage also offer differentiated risk profiles. Revenue is often supported by creditworthy tenants in essential industries such as technology, logistics, and healthcare. According to Newmark, average cold storage rents have increased more than 100 percent since 2020, prompting some occupiers to explore ownership to manage long-term costs. Sustained rent growth and limited supply continue to attract institutional capital.

Pension funds, REITs, and private equity firms increasingly view these assets as long-term, income-producing investments comparable to multifamily and industrial. Their consistent demand helps offset exposure to weaker sectors. Many investors also mitigate execution risk by partnering with experienced operators who bring technical and operational expertise.

For institutions prioritizing capital preservation and steady yield, these property types offer a compelling balance of resilience and growth.

Challenges and the Road Ahead

Despite strong fundamentals, data centers and cold storage present real challenges. High construction costs, energy intensity, and complex zoning requirements create meaningful barriers to development. Colliers notes that developers must manage power constraints, water usage concerns, regulatory approvals, and community opposition while maintaining tight project timelines. Rising costs for land, power infrastructure, and specialized equipment further complicate execution.

However, these challenges reinforce the scarcity value of existing assets. As technology adoption continues and global supply chains become more complex, demand for these facilities is expected to remain strong. Well-capitalized sponsors with sector experience are best positioned to benefit from continued growth. Over the coming decade, institutional allocations to these specialized assets are likely to increase.

How Lever Capital Partners Can Help

Lever Capital Partners works with experienced sponsors to secure financing for data centers, cold storage, and other specialized property types. In sectors where traditional lenders may be cautious, LCP provides creative debt and equity solutions aligned with project requirements.

By leveraging relationships with trusted lending partners, LCP supports efficient execution and flexible capital structures. Whether expanding digital infrastructure or developing new cold storage facilities, LCP helps sponsors access the capital needed to move projects forward.