October, 2025 - Cloud, Colo & Data Center Pro

Five years ago, few imagined that data centres — those humming, power-hungry fortresses of servers — would become one of the most coveted infrastructure assets on the planet.

But that’s exactly what has happened.

The balance of power has flipped. Once, hyperscalers like AWS, Google, and Microsoft dictated lease terms and pricing. Today, it’s the developers and operators holding the upper hand — because the real scarcity isn’t capital anymore. It’s power and land.

💡 The Golden Ticket

A leading infrastructure investor recently called power access “a golden ticket” — and it’s hard to disagree.

In the age of AI and hyperscale cloud growth, a secured grid connection is everything. You can raise billions and hire world-class engineers — but if you can’t plug into the grid, you can’t scale.

The numbers tell the story. In 2021, U.S. data centre rents averaged around $120 per kW per month. By 2024, that figure climbed over 50%, nearing $190 per kW. London saw similar jumps. This isn’t inflation — it’s scarcity economics.

Those who control powered land now hold the real bargaining power.

🧭 From Hyperscaler Leverage to Developer Control

For years, hyperscalers pushed for short 5- to 7-year contracts and flexible termination rights. They called the shots.

Not anymore.

Tight grid capacity and exploding AI demand have turned the tables. Tenants who once wanted short leases are now regretting it — there’s simply no capacity left, and renewals cost far more.

Today, 10-, 15-, and even 20-year contracts are the norm again. Banks and institutional lenders love it: predictable cash flows, long-dated contracts, and high-credit counterparties. Data centres are starting to look, feel, and finance like traditional infrastructure.

🏗️ From Colocation to Mega-Campuses

The model has evolved dramatically. What used to be multi-tenant colocation sites is becoming a network of massive, single-tenant campuses — hundreds of megawatts each — built around one hyperscaler.

That shift allows developers to recover rising capex costs tied to liquid cooling, AI training, and high-density workloads. Interestingly, many hyperscalers are now co-funding upgrades, treating them as tenant improvements, just like in commercial real estate.

It’s a more mature, symbiotic model — one that aligns incentives and strengthens partnerships.

🤝 Creative Structures and Shared Risk

Deal structures are also becoming more sophisticated.

When Meta financed its $26 billion data centre campus in Louisiana, the project reportedly included a “residual value guarantee.” In other words, if Meta exited early and the asset value dropped, investors would be compensated.

A few years ago, such clauses were rare. Now they’re becoming standard as both sides seek to balance long-term risk and reward.

Developers are also designing hybrid facilities — capable of switching between air and liquid cooling — and adopting flexible layouts that can evolve with technology. As Brookfield’s Sikander Rashid noted, “A chip’s useful life is about five years — your return on capital should match that.”

🏦 Core Capital Enters the Game

Not long ago, core and core-plus funds avoided data centres, seeing them as too technology-driven. That’s changing fast.

Brookfield, Arjun Infrastructure Partners, and Interogo recently invested in a €3.6 billion European data centre portfolio with 12-year average contracts and inflation-linked escalators — exactly the type of structure core infrastructure funds love.

One industry insider summed it up perfectly:

“If you’ve got powered land near population centres, your barrier to entry is the grid connection itself.”

In other words: the moat isn’t a brand or a logo — it’s megawatts.

⚙️ The Moat Built on Megawatts

Every road in this story leads back to power.

If forecasts hold true, most major data centre hubs will hit grid constraints within a decade. That physical bottleneck — not capital — will define value.

It’s why long-term leases are back. It’s why banks are lending more confidently. And it’s why investors view data centres as durable, inflation-protected infrastructure.

Operators like DigitalBridge are also moving to triple-net leases, where tenants manage their own power and cooling systems. That shift drives efficiency and attracts even more institutional capital.

🌍 The Future: Flexible, Long-Term, and Infra-Grade

So, are data centres infrastructure? The debate is over.

They’ve earned their place alongside utilities, ports, and energy assets — long-term contracts, critical grid dependence, and predictable returns.

But beyond the financials lies a bigger truth: the digital economy runs on electrons and geography. Whoever controls the megawatts controls the growth.

AI will only intensify this. The next generation of winners will be those who think like infrastructure investors but move like tech builders — fast, flexible, and focused on power resilience.

The moat is no longer theoretical. It’s physical. It’s grid-connected. And it’s here to stay.

✍️ The digital economy’s backbone isn’t code — it’s concrete, copper, and current. The investors who understand that first will shape the next decade of infrastructure.

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#DataCentres #InfrastructureInvesting #AIInfrastructure #DigitalTransformation #Sustainability #EnergyTransition #RealAssets #PrivateEquity #InfraFunds #Hyperscale #CloudComputing #PowerMarkets #GridCapacity #DataEconomy #LongTermCapital

https://www.linkedin.com/pulse/data-centres-from-tenants-titans-andris-gailitis-qjobf

1. What is “elite overproduction” or “elite inflation”?

The term elite overproduction (sometimes called elite inflation) describes a situation where society produces more people aspiring to elite status — for example, educated and ambitious individuals seeking high-level positions or influence — than there are actual openings within the elite itself (in politics, business, public administration, etc.).

The “elite” refers to those who hold or strive to hold positions of power and influence — political, economic, ideological, or intellectual.

When there are too many educated and ambitious people, and not all can be “absorbed” into the elite, a layer of frustrated and excluded aspirants emerges. In structural-demographic theory (SDT), this is seen as one of the main drivers of social instability.

2. Why can having “too many elites” create instability?

Competition within the elite The more people compete for a limited number of top positions, the fiercer the rivalry becomes among elites themselves — leading to divisions and internal conflicts.

Frustrated “failed” elite aspirants Those who expected to gain power or status but were shut out often become bitter and may join radical or anti-establishment movements.

Erosion of legitimacy When many people see that the path upward is blocked while the existing elite clings to its privileges, trust in the system declines.

Ideological polarization As elite groups compete for support, they may adopt increasingly extreme or opposing positions, further dividing society.

Administrative overload Too many elite aspirants can put pressure on state resources — more people demanding jobs, subsidies, or privileges — which undermines fiscal stability and governance quality.

3. Strengths and criticisms

Strengths

Explains a visible phenomenon: many educated, ambitious people feeling “stuck.”
Highlights that crises can be caused not only by the masses but also by elite rivalries themselves.
Supported by historical parallels — such as the late Roman Empire, Chinese dynastic collapses, or European crises.

Weaknesses

It’s hard to precisely define who counts as “elite” and how much “overproduction” there really is.
The theory can sound overly deterministic — as if decline is inevitable and cyclical.
Other scholars emphasize different causes: inequality, the shrinking middle class, institutional decay, or media polarization.
Not every case of elite overproduction leads to crisis — strong institutions can sometimes absorb and adapt.

4. Does this apply to today’s Western world ?

We can see similar patterns: many university graduates with high ambitions unable to find jobs matching their skills. These “failed elite aspirants” may become critics of the political system, supporters of radicals, or simply a destabilizing force.

The key question is whether this phenomenon is widespread enough in Latvia and the West to become a systemic problem. It seems to grow dangerous when combined with other factors — economic inequality, fiscal strain, and public distrust in institutions.