In today’s digital era, the demand for seamless internet connectivity and expansive online services is at an all-time high. This escalating need has been a driving force behind the accelerated growth of the data center market, especially over the past decade. Serving as the backbone of the digital infrastructure, data centers are integral to supporting internet expansion, ensuring the rapid processing, storing, and management of colossal amounts of data. This resource explores the robust growth of the data center market in New York, highlighting the opportunities it presents for landowners and developers alike while showcasing how LandGate facilitates their engagement in this thriving industry.
What Should Landowners Know about Data Center Development in New York?
Over the last decade, the data center market has been growing rapidly, undergoing a remarkable transformation. Data centers serve to be an essential part in maintaining internet growth and online service demand. They serve as specialized locations of vast computer networks and storage systems that work around the clock to process, store, and manage data.
The data center market in New York has shown considerable growth over the last few years with data center leasing taking over vacancies all over the city, and in rural areas. With a multitude of projects around the state, New York maintains its position as the fourth largest data center market in the United States. The state hosts over 150 data centers and landowners in New York have experienced an increase in demand for their land along with the expansion and creation of new data center projects. Developers all over the state are looking for land to expand new data centers and start new colocation, hyperscale, and enterprise data centers across New York, contributing to its already concentrated data center market. These growth opportunities provide benefits for the general economy and job creation but especially for landowners across the state who are able to take advantage of data center growth.
LandGate is a marketplace that connects property owners of all types who want to sell or lease their land directly to developers seeking land for the development of data centers, while also providing useful property data to owners to help them make informed decisions through this process. Equipped with information about the value of their land, capitalization rates, and much more, LandGate provides landowners in New York with extensive property data at no cost to help navigate the process of leasing or selling their land for a data center. To learn more about your property's potential suitability for a data center, get a free Property Report on LandGate's map and check out the data center value index score:
Why is it Attractive to Lease or Sell Your Land for Data Centers in New York?
New York’s rich connectivity to fiber optic lines and business hubs opens it up to a multitude of data center development options, allowing landowners to utilize whatever land they have to their advantage and benefits that the market offers. Due to its reliable and large energy supply, state incentives, abundance of land, and booming business environment, the state is home to major market players who own numerous projects in the area. Companies such as Digital Realty Trust, Databank, CyrusOne and Equinix dominate the market within New York and have invited numerous traction into the area.
While the buildable acreage for data centers in New York can vary according to project specifications, the typical size range for small facilities can start off with just a few acres while large-scale projects cover an average of 20 square meters. Larger data centers in New York can exceed 50,000-60,000 square meters. A medium-sized data center will typically range between 20,000 meters square of land, and is the most popular size of property that developers demand in New York. Larger data centers have seen an overall increase in demand over the last year.
Along with the financial gain from either leasing or selling their property for data centers, landowners in New York should be aware of the benefits that developing a data center has on the regional and state economy. The New York data center market has exceeded over 1500 MW of power over the last few years, with the help of multiple hyperscale projects from major players all over the region. For example, CleanArc’s data center’s plans to create 300+ MW data centers over 500,000 acres in Orangeburg, Rockland county. Opportunities such as these also create room for environmentally friendly data center development. With new approaches to carbon-free energy, companies have now shifted to more efficient ways of running their data centers.
Additionally, New York is moving towards advanced technological methodologies and is far ahead of other data center markets in incorporating artificial intelligence, machine learning, and edge computing methods within their work spaces to improve overall efficiency and performance. Latency reduction efforts, like reducing data file size for smoother data transmission, have increased with the advancement of technology within data centers, allowing New York to remain at the forefront of technological innovation. Another example of this is Google’s data center in New York City. With energy efficient cooling systems, renewable energy solar farms, and advanced waste management systems, the Google data center in the city aims to reduce its carbon footprint while adopting modular designs to optimize airflow and cooling efficiency, thereby also using less water. Such projects are testament to the state's growth and advancements in data technology.
Moreover, data center projects in New York are incorporating environmental sustainability methods to increase energy and productive efficiency, making them low-traffic sites with reduced infrastructural strain, which preserves the nature of rural land. Many companies have included initiatives such as advanced cooling techniques such as liquid cooling of HVAC. Advanced cooling systems have reduced the overall amount of energy required to carry out operations within centers by up to 40%. Some centers have pursued Leadership in Energy and Environmental Design certifications which ensure that buildings meet environmental performance standards and that projects adopt energy efficient practices.
Data centers in New York have a great impact on the job market. Each project brings in a multitude of employment opportunities across multiple sectors. For example, Meta’s $800 hyperscale project in DeWitt created over 1000 jobs across construction with around 150 operational and maintenance jobs after completion. Such projects also create full-time opportunities across colocation facilities and hyperscale projects.
Overall, New York offers large growth opportunities to large market players and investors, however, the state experiences challenges across power, space and the city’s aging grid structure. However, data center development shifting towards the suburbs has created numerous more opportunities to create large scale projects, while the concentrated city is still inviting multiple colocation facilities into the area. Adaptive strategies such as retrofitting existing buildings and adopting alternative cooling methodologies allows data center developers to meet energy and space needs. Similar systems create a reliable stream of income for landowners that lease their land for data centers regardless of the risk of natural disasters and structural limitations.
Data Center Leasing Considerations for Property Owners in New York
By leasing or selling property in New York for the development of data centers, landowners are able to contribute to the infrastructure that keeps the digital world and the economy running smoothly. Property owners of all types, ranging from individuals to corporations and governments, are not only a critical component in the digital network that supports the technology provided by data centers we need to operate every day, but also a key component to regional and state economic development.
When selling or leasing land in New York for data centers, landowners should keep the typical size requirements in mind along with several other important considerations. Zoning and regulatory laws will impact the amount of land eligible for development. The property’s proximity to power and fiber optic sources will also affect a property’s suitability for data center development.
New York offers generous tax incentives for data center development that results in large traction into the market. New York data centers benefit greatly from tax incentives through several development programs. Concentrated in upstate New York, but also available in urban areas, these programs such as the Upstate Revitalization Initiative support the development of data centers. Additionally, some municipalities offer property tax abatements to reduce overall costs. Programs such as tax exemptions on equipment draw data center developers to the area. Long-term tax benefits also allow data center investors to enter into long-term lease agreements with landowners to construct data centers on their property, which provides a secure and consistent source of income for landowners.
What is the Process of Leasing Land for Data Centers in New York?
The process of leasing land for data centers in New York involves ensuring that your land is qualified, marketing the property for lease, and then negotiating lease offers before the data center is constructed.
Step 1: Land Qualification
The first step for landowners in New York curious about leasing or selling their land for data center development is to understand if their land is suitable for a data center. Factors such as location, buildable acreage, zoning, topography, proximity to energy and utilities, and environmental considerations like flood zones and wetlands all impact a property’s viability for a data center.
Curious if your land in New York could qualify for a data center lease? LandGate provides data center value index scores for every property in the U.S. within our free property reports. On a scale of 0-100, the data center value index score will let you know how suitable your property could be for data center development. Get a free property report by finding your parcel on LandGate’s map:
Institutional and government property owners in New York also have the opportunity to lease their properties for data center development to generate revenue and contribute to economic growth. To learn which of your agency’s specific sites are most suitable for data center development, book a free consultation call with the government team at LandGate below:
Step 2: Market Your Property for Lease or for Sale for a Data Center
Listing your property in New York for lease or for sale for the construction of a data center on LandGate’s marketplace is the best way to market and get the most value from your property. By listing on LandGate’s marketplace, you are presenting your property to various competitive companies actively searching for properties in New York to lease or buy for data center development.
If you’re unsure if your property could be suitable for a data center, our team recommends creating a listing anyway- listing is completely free with no obligations to accept any offers, so you never know what kind of offers you may receive.
Step 3: Receive Lease Offers
Once your listing is live on LandGate’s marketplace, any interested developers will reach out to you directly with offers using the contact information provided when you registered for your LandGate account.
Step 4: Lease Negotiation
Negotiating the ground lease offer is the first step you will take after receiving an offer. LandGate is unable to provide legal advice or assist with conducting due diligence on any offers that you receive, but we can refer you to a licensed expert that can help. These professionals, such as commercial real estate brokers, attorneys, and engineers, can assist you in ensuring that you are securing a good deal.
Always remember that lease agreements are completely negotiable. You can negotiate things like the value of the lease payments, the length of the lease, and the percentage of the escalator. Typically, ground leases for data centers range from 75-99 years, and generally provide escalating base rents, percentage rent arrangements, and outline responsibilities for maintenance and utilities.
Step 5: Lease Option Agreement
After negotiations, developers need to retrieve data center option agreements. Typically, this follows a check by the developer, ensuring that the land meets their needs and in the case of tax exemptions of subsidiaries, meets all necessary government requirements. It is essential for both parties involved in the agreement to assess possible engineering and land factors, to ensure the feasibility of the project and ensure that it receives all necessary approvals to begin. Oftentimes, data center proposals will be pitched to the county or state government.
Why can’t I get a lease agreement directly?
The process of developing any large data center begins with the developer optioning the land, also known as ‘site control,’ typically through a Ground Lease. Once thorough land evaluation has taken place, utility application is necessary. This means that the data center project will need further due diligence to ensure that sites have required proximity to a power source (renewable or a power substation), access to fiber optic cables, and that necessary easements are in place.
Where can a landowner get more information about the lease?
You can find out if your property could be suitable for a data center by getting a free property report from LandGate. LandGate provides data center value index scores for every property in the U.S., which will evaluate your property on a scale of 0-100, letting you know how suitable your property could be for a data center. Get a free property report by finding your parcel on LandGate’s map:
Step 6: Lease Agreement
Once site control is confirmed, the project is then moved to a ‘planned’ phase. The option agreement now becomes an official lease agreement, and the landowner begins to receive lease payments from the data center developer. The specific amount of these lease payments depends on what is negotiated in the lease.
Step 7: Data Center Construction
Lease payments for data centers are phased as projects progress. Typically, the lease payments start as a small amount during the option period and increase during the construction phase of the data center, with payments reaching their peak upon completion of the data center.
Depending on the size of the project, constructing a data center can take anywhere from 18 to 40 months before the data center reaches full operation. Smaller projects will take a substantially less amount of time to complete.
Step 8: Active Data Center
After construction is completed and the data center is fully operational, the lease enters the ‘production’ phase, which indicates that the land is now responsible for data storage and transmission through the data center. This period will last throughout the remainder of the lease.
