The squeeze on mega-warehouses
Texas developer Ross Perot Jr. says builders hunting for million-square-foot buildings to stage and assemble data center gear are finding slim pickings. By his tally, the U.S. has only 15 to 20 such vacant warehouses right now, down from a more typical 50. He made the point Tuesday while taping The David Rubenstein Show: Peer-to-Peer Conversations during Bloomberg Invest Dallas.
Pull the camera in on North Texas and it gets tighter. Perot said there is just one of these buildings currently available, even as his firm Hillwood develops the AllianceTexas Data Center Campus.
Why AI is driving demand
Perot put the demand surge in plain English: "You've got this industrial boom going on in the United States, and we're running out of warehouses." He added that "The AI supply chain is staggering and it's like every AI supplier needs a million square feet."
Market data backs up the scarcity story. Jones Lang LaSalle says that, among Class A facilities measuring at least one million square feet, vacancies slid to 5.4% in Q3 from 9.5% a year earlier. Over the same period, developers expanded the construction pipeline by nearly 29% to 317 million square feet.
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Politics, pushback, and Perot's pitch
Perot noted his family's ties to data center development date back to the 1960s and said the sector drew little attention until recently. "No one said a word until about six months ago," he said, comparing today's debate to early reactions to fracking: "They became controversial and I think it's a little bit like fracking. People got all wound up on fracking before they understood it. They're sort of wound up on data centers." He said data centers have also become a midterm-election topic, with critics citing heavy electricity and water use along with air and noise issues, while supporters argue they are core to the AI future.
His pitch to communities centers on economics. Perot said the industry needs to better explain the benefits, especially tax revenue. "Once you understand the data center and the amount of prosperity it can bring into your community, they've got to be done," he said. "These data centers are huge tax generators for a city."
The bottom line for investors
In plain English: large, top-tier warehouses are scarce, and developers are responding by starting more projects. North Texas looks especially tight by Perot's count, and public scrutiny has entered the conversation. For portfolios exposed to logistics and AI buildouts, the story here is straightforward supply, demand, and sentiment.
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