Most people chasing the AI boom are trying to sell compute. The quieter position is to be the landlord, and the research points to one asset that decides everything.
The business model. Buy land, build the shell, and bring in the electric power. Then lease that building to a large tenant — Microsoft, Amazon, Google, Meta or a third-party provider — who installs their own computers inside. We are the landlord. We never run the machines. In the trade this is called a powered shell, and it is the lowest-risk seat in the industry.
Why the timing works. The five biggest US tech companies are spending roughly $700 billion on capacity this year. Vacancy in prime markets sits between 0.3 and 2.3 percent, and about three quarters of everything under construction is already leased before it is finished. Demand is not the problem.
Why it is niche. The scarce thing is not land or money. It is power, and specifically speed to power. In Northern Virginia the wait for a grid connection runs four to seven years. Every Canadian province has moved from open access to rationed allocation — you now compete for an allocation rather than simply asking for one. The large transformers that move that power carry lead times of two years or more. So the real asset is not the site; it is a secured place in the connection queue and an early transformer order. Chase the power first and let the land follow. That inversion is what most newcomers get wrong.
Why it is profitable. Promoters advertise 25 to 40 percent returns. Independent underwriting lands closer to 7 to 9 percent unlevered yield on cost and 12 to 18 percent levered IRR, with 30 to 48 months from site control to first rent. Those are good returns for infrastructure. Anything above them should be treated as a bonus, never as the plan.
Why North America. Canada offers cold weather, a grid that is 78 percent non-emitting, political stability, and data-residency rules that create steady domestic demand. Alberta and Ontario lead — Alberta for speed, land, and available power; Ontario for the deepest demand and best fibre, if the power question is solved early. Quebec and British Columbia still hold the cleanest power, but Quebec has proposed raising its rate for new data centers to about 13 cents from roughly 4, so the cheap-power story there has weakened.
Why the capital is real. This one is not capital-light. Construction cost is measured per megawatt of capacity, so the size of the cheque is set by how much power the building is designed to draw.
The constraint is electricity. Municipalities and private providers have already begun building new generation, but even on a fast schedule that capacity is three to four years away. This is what makes a secured allocation so valuable. Power is the scarce half of the deal and the tenant is the plentiful half — once you can guarantee capacity on a date, a creditworthy tenant is comparatively easy to sign.
If you would like the underlying research, get in touch.