Leasing property for data centers in Wisconsin presents a unique opportunity for landowners, commercial real estate property owners, and government agencies with underutilized land. As the demand for data storage and processing continues to surge, driven by advancements in technology and the proliferation of data-intensive applications, the strategic use of available land for data centers can yield significant financial benefits. This resource will explore advantages of leasing property for data centers, explore key considerations for stakeholders in this sector, and highlight how Wisconsin's favorable climate and infrastructure can serve as a catalyst for growth and innovation in the digital economy.
What should property owners know about data center development in Wisconsin?
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.
Wisconsin has shown great potential over the last few years as a notable player in the data center industry. The state holds over 15 GW of power to meet growing energy demands and has committed to adopting renewable energy methods such as wind, solar, and battery storage to meet market requirements. The Badger state holds over 40 data centers across a range of enterprise, hyperscale, and colocation services. Major players have shown increased interest in the state and the expansive land it has to offer, with large stakeholders such as Microsoft, Ark Data Centers, Alliant Energy, and Tierpoint investing in large, hyperscale projects in the market. These opportunities provide benefits not only for the general economy and the job market, but also for landowners across the state.
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 Wisconsin 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, which will score your property's suitability for a data center on a scale of 0-100:
Why is it attractive to lease or sell your land in Wisconsin for data centers?
Wisconsin has generated a considerable amount of revenue over the last year, and the state is experiencing a data center boom. With major players announcing new plans for hyperscale data centers, companies are predicted to generate a projected $271 million in economic revenue per project. With an upcoming business environment, and favorable geographical and climate conditions, Wisconsin is a promising area for year round business, leading to favorable lease agreements between data center developers and landowners. The state has seamless access to major markets across the country and data center projects have taken on infrastructure to ensure efficient logistical and connectivity operations.
While the buildable acreage for data centers in Wisconsin 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 100-150 acres. Larger data centers in Wisconsin can exceed 200 to 300 acres. A medium-sized data center will typically range between 50-90 acres of land, and is the most popular size of property that developers demand in Wisconsin.
Along with the financial gain from either leasing or selling their property for data centers, landowners in Wisconsin should be aware of the benefits that developing a data center has on the regional and state economy. Along with being a key site for economic activity, operational costs in the area are much lower in comparison to neighboring states. It is projected that a singular project in Wisconsin will generate around 2000 jobs each in Milwaukee and Eau Claire and north of 1500 in Madison and Green Bay during construction phases. For example, Microsoft’s new $3.3 billion project in Mount Pleasant is projected to create around 2300 jobs in construction, maintenance, and full time positions. With each data center creating hundreds of opportunities, they also ensure long term benefits for property owners.
Additionally, Wisconsin is moving towards advanced technological methodologies and has been fast spaced in data center technology development by 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.
Moreover, data center projects in Wisconsin 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.Several data centers have shifted towards the use of closed-loop cooling systems to recycle water, and thereby increase efficiency while being mindful of the land’s resources. Companies such as Meta have taken on the initiative to integrate AI measures and zero-waste cultures while redesigning their data centers to ensure operative efficiency and environmental sustainability.
Many data centers have taken on natural disaster and risk mitigation, creating location facilities that are built to withstand damage and have energy efficient ventilation systems, creating a reliable stream of income for property owners that lease their land for data centers regardless of the risk of natural disasters.
Considerations for property owners
By leasing or selling property in Wisconsin 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 Wisconsin 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.
With Wisconsin being at a locational advantage through serving as a trade hub and port for the country, landowners and data center developers can mutually benefit from the planning and development of data center projects. The Wisconsin Economic Development Corporation overlooks administrative aspects of data center related benefits and incentives and provides exemptions for projects that fulfill certain criteria. Long-term tax benefits 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 property in Wisconsin for data centers?
Property owners should understand the essential eight-step process for leasing land for data centers in Wisconsin to navigate the complexities of leasing agreements in the state's competitive market. From initial research and site selection to negotiation tactics and finalizing contracts, each step plays a crucial role in fostering successful partnerships and optimizing the benefits of leasing property for data centers.
Step 1: Land Qualification for Data Centers in Wisconsin
The first step for landowners in Wisconsin 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 Wisconsin 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 Wisconsin 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 & corporate team at LandGate below:
Step 2: Market Your Property for Lease or for Sale for a Data Center
Listing your property in Wisconsin 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 Wisconsin 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 Offers to Lease Your Property for a Data Center
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: Data Center Lease Agreement 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: Data Center Lease Option Period
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 data center 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 data center 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:
If you have received a lease offer from a data center developer, it's important to conduct your own due diligence and work with a licensed attorney to ensure that the lease agreement is fair and mutually beneficial.
Step 6: Data Center 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.
Comments