February 2024

data center

The Demand for Data – and What it Means for Real Estate

  • As commercial real estate investors, we are always looking for the next new investment that is seeing growing demand.
  • With the continued reliance on and need for more data, the demand for data centers has continued to increase.
  • As a result, it may be worth looking into whether developing new data centers or repurposing older buildings is a good investment.

I’ve mentioned it before in this blog but I am not solely a commercial real estate attorney. Indeed, one of the advantages I think I have as a real estate attorney is that I am also a commercial real estate investor. With my business partner Scott Studzinski, we have formed Moontower Capital, with which we invest in commercial real estate around Texas and Michigan. 

I am sure you are no different, but as a result of this, I’m always looking for the next big thing in real estate. Not only for my clients to find good investments but also for Moontower and our investors. So while the general consensus is we may want to hold off on office for now, and multifamily is usually a solid investment, there’s another investment class that I have heard a lot about recently. And after doing some research, it seems to be booming. So let’s talk about data.

The Increase of Data Centers Across the United States

I don’t think its news to anyone that the digital age has propelled us into a world where data is king. From streaming our favorite shows to storing personal information and powering businesses, the demand for data storage and processing continues to skyrocket. And with this surge in demand has come a corresponding demand in the need for data storage centers. These specialized facilities house the servers and equipment that power our digital lives, and their demand is rapidly outpacing existing capacity.

 The National Landscape: A Growing Demand for Data Centers

Across the United States, the need for new data centers is significant. A recent report by Synergy Research Group estimates that the demand for hyperscale data centers will significantly increase in the coming years. Overall, US data center demand is projected to grow by 10% per year through 2030. This growth is fueled by several factors, including:

  • The rise of cloud computing: Businesses are increasingly migrating their operations to the cloud, requiring data centers to store and manage vast amounts of data.
  • The proliferation of connected devices: The Internet of Things is connecting an ever-growing number of devices, each generating and consuming data.
  • The increasing adoption of artificial intelligence and machine learning: These technologies require immense computing power, which data centers provide.

And these trends are expected to continue in the near future.

Texas is a Data Center Hotspot

 Texas has emerged as a prime location for data center development, driven by several key advantages:

  • Abundant land and affordable power: Texas boasts vast tracts of land suitable for data center construction, coupled with a deregulated energy market that offers competitive electricity rates.
  • Strategic location: Situated in the central United States with excellent connectivity to major fiber optic networks, Texas offers efficient data transmission across the country.
  • Business-friendly environment: Texas’s tax-friendly policies and streamlined permitting processes make it an attractive destination for data center developers.

As a result, the data center landscape in Texas is booming. The demand in the Dallas-Fort Worth area, for example, is booming. Net leasing of data centers there was seven times the rate of 2020. And here in Central Texas, Prime Data Centers just announced a new $1.3 billion data center campus in rural Caldwell County.

So what does that mean for Texas commercial real estate developers? Well … let’s build more data centers. The need for new data centers across the country, and specifically in Texas, is significant. And I reckon that is going to continue as we continue to rely on more data as a society. 

Data centers, however, can be complicated to develop. Its my understanding that they have very specific power, utility, and space needs. As a result, its unlikely that you can just repurpose any old office building into a data center. But with the growing demand, its at least worth thinking about what is possible.

The Demand for Data – and What it Means for Real Estate Read More »



• Under premises liability law in Texas, there are there levels of duty of care owed to individuals on a property.
• Most folks on a commercial real estate property are going to be invitees, owed the highest level of care.
• As a result, it is important for commercial real estate owners to take proactive steps to minimize their risk.

I hate swimming pools. Not personally. I’m not a monster. I just hate when my clients have them. Everytime I go to a multifamily property and see a swimming pool, I want to fill it in immediately. The lawyers out there reading this will understand. It feels like the entire first year of law school is spent talking about what a giant liability swimming pools are. It scarred me and I’ve never gotten over it.

But I get it. Tenants want it – especially in Texas. So that is why I have to talk to my clients about the potential liability of they have when they own property. Like anything in the law, premises liability – what this area of the law is called – can be nuanced and vary depending on the type of property and your legal classification as an owner or occupier. Its extremely important, therefore, for property owners to understand their rights and responsibilities. By doing so, you can better manage your risk and mitigate the potential for costly lawsuits. So lets talk about it.

Understanding a Property Owner’s Duty of Care

First thing to understand is a property owner has a duty of care to ensure the safety of individuals on their property. The level of care owed, however, varies based on the visitor’s classification:

• Invitees: Individuals expressly or impliedly invited onto the property, such as tenants, customers, or invited guests. Owners owe the highest duty of care to invitees, which includes inspecting the premises for hazards, correcting them promptly, and warning invitees of known dangers.
• Licensees: Individuals lawfully on the property but not at the owner’s express or implied invitation, like social guests or delivery personnel. Owners owe a lesser duty to licensees, primarily involving refraining from creating hidden dangers or intentionally harming them.
• Trespassers: Individuals unlawfully on the property, with no permission or invitation. Owners generally owe no duty of care to trespassers, except to avoid willful or wanton misconduct. And they are generally not liable for injuries that occur on the property.

What does this Mean for Property Owners?

So now that we know there are different levels of care, what does it all mean for commercial real estate owners? Let’s look at some specific asset types and talk about them.

  1. Multifamily Housing:

The most likely place that all of this will be relevant is in a community’s common areas. This includes the lobbies, walkways, pools, playgrounds, etc. Landlords hold significant responsibility for the safety for these areas because the people who will populate them are likely invitees. As a result, having regular inspections, proper maintenance, and addressing reported hazards promptly are crucial to avoid liability.

And while it may seem strange, inside the units, the level of care doesn’t really change. Because the tenants are still invitees. The difference, of course, is that a tenant’s own negligence may play a role in an injury. So that could reduce the amount of the landlord’s liability.

  1. Retail Properties:

In retail properties, once again people are often invitees that require the highest duty of care. This is why its so important to be careful and try to avoid any slip and fall hazards on the property, including but not limited to wet floors, uneven surfaces, and poorly maintained walkways. These are all common culprits in slip and fall accidents. Regular cleaning, addressing spills promptly, and ensuring proper drainage are paramount.

Store owners also have a responsibility to ensure products are displayed safely and securely, promptly remove damaged items, and address potential hazards like falling merchandise.

Finally, obviously while not always preventable, taking reasonable security measures to limit criminal activity like security cameras and adequate lighting can help mitigate liability concerns.

  1. Office Buildings:

Similar to multifamily common areas, owners or management companies are responsible for the safety of shared spaces like lobbies, restrooms, and parking garages. These are areas that are often populated by invitees that require the highest duty of care.

Proactive Measures can Help Minimize Risk

So knowing that, as a commercial real estate owner, you often owe people on your property the highest duty of care, how can you minimize your risk? Some of these proactive easures may help.

• Regular Inspections and Maintenance: Implement routine inspections of your property to identify and address potential hazards promptly. Document these inspections and maintenance records diligently.
• Clear Signage and Warnings: Post clear warnings about potential dangers, like wet floors or construction zones, and ensure adequate lighting in these areas.
• Tenant and Employee Training: Educate tenants and employees about safety protocols and their role in identifying and reporting potential hazards.
• Insurance Coverage: Ensure you have adequate liability insurance coverage to protect yourself in case of unforeseen incidents.

Its important to note, none of the suggestions above are going to eliminate your risk completely. And these is definitely not an exhaustive list. But implementing some of these and understanding your duty can help. And, of course, hiring a great lawyer.