Power Crunch: How Utility Delays Are Stalling CRE Growth
What’s the one thing that could derail your next data center deal? It’s not financing or location—it’s power. As data centers fuel CRE demand, utility delays are stalling projects, threatening timelines and returns. Power approvals for grid-independent facilities—think solar, batteries, or gas backups—are lagging, forcing CRE professionals to rethink site selection, budgets, and deal strategies.
PJM Interconnection, North America’s largest power grid, projects that data centers will demand 32 gigawatts by 2030—enough to power 24 million homes. But in 2024, PJM added just 5 gigawatts of capacity. This shortfall is spiking energy costs by over 20% in key markets, hitting CRE budgets hard. Globally, the issue is even worse: 20% of data center projects face delays, some waiting over a decade for approvals, per the International Energy Agency. In North America and Europe, grid bottlenecks are causing 4-to-8-year holdups, stalling both innovative and traditional builds.
Data centers may be the new anchor tenants but -- without power -- projects grind to a halt. With vacancy rates below 1% in major U.S. hubs and demand flooding secondary markets, securing power fast is as critical as breaking ground. Forward-thinking solutions like modular nuclear reactors are gaining traction, offering reliable, green energy. Microsoft, for instance, is exploring nuclear to power its cloud infrastructure—a trend that could reshape CRE site selection and valuations.
What CRE Pros Can Do
- Track Policy Shifts: Local and state incentives for green power, modular nuclear, and resiliency upgrades are evolving fast. Staying informed helps clients tap into new capital and regulatory tailwinds.
- Pitch Power as Value: Whether buying, leasing, or building, energy strategy drives value. Sites with quick grid access, hybrid systems (solar plus storage), or nuclear proximity will attract premium interest.
Power access isn’t just a back-office concern—it’s a dealmaker or dealbreaker. It shapes site selection, underwriting, and asset value. CRE professionals who navigate the energy landscape will lead the next wave of digital infrastructure growth. Those who don’t? They’ll be stuck waiting on the grid, watching opportunities slip away.
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