The negotiating "pendulum of leverage" currently resides with data center providers in a market where customers see compute capacity as existential, says Mark McComiskey, Founding Partner at infrastructure investment firm AVAIO Capital.
"It is an undeniable fact that the lease rates per megawatt are going up," says McComiskey, noting that AVAIO is just beginning to commercialize its six data center projects.
Market-wide pricing trends show "the rate per kilowatt month in almost every market in North America and Europe, those numbers have been rising rapidly."
While some of the price increases reflect higher costs due to supply shortages, McComiskey says rates have climbed beyond what can be attributed to development expenses alone. "That would tend to cause you to believe that the pendulum of leverage, at least as expressed through economics, has shifted somewhat in favor of the data center provider," he explains.
With companies urgently seeking compute infrastructure, many companies view securing AI or cloud capacity for 2025 and 2026 as essential. "It's becoming in many cases existential to have significant AI capacity or significant cloud capacity," McComiskey says. "And so if you have capacity, if you've actually moved forward with development and started construction, and you can deliver in that time frame, customers are willing to pay up."
McComiskey shares his insights in the Cool Vector episode, "How AVAIO Builds Data Centers With 'Just-in-Time' Capital." Watch the full interview on Cool Vector's YouTube channel:
Cool Vector on Spotify: https://lnkd.in/esN6FYW2
Cool Vector Website: coolvectormedia.com
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