Data Center Investment in Las Vegas
Vegas data centers trade tight. Cap rates hit 4.2% to 5.8% for quality assets with strong power infrastructure. The market's seen $2.8B in transactions over the past 18 months, mostly hyperscale buyers chasing AI capacity. Power's the real story here - NV Energy's got 850MW committed to new facilities, but you're competing with crypto miners and the Strip for grid access. Most buyers want 10MW minimum with 2N cooling. If you're marketing a sub-5MW facility, expect longer hold times unless you've got exceptional connectivity.
Market Context
Cap Rate Range
4.2% to 5.8% for institutional-grade facilities, 6.1% to 7.2% for smaller colocation assets
Current Vacancy
2.8% overall, effectively zero for hyperscale-ready space above 20MW
Rent Trend
Up 18% YoY for powered shell, 12% for retail colocation space
Absorption
94% of new supply absorbed within 6 months of delivery
Price Per Unit Trend
$485 to $720 per kW for powered space, $1,200 to $1,850 per kW for finished colocation
Transaction Volume
$2.8B over trailing 18 months, 67% hyperscale acquisitions
Submarket Analysis
Southwest Industrial Corridor
4.3% to 5.1% capVacancy
1.2%
Avg Rent (1BR)
$590 per kW powered shell
Hottest submarket. Direct NV Energy feeds and fiber convergence.
OM Tip
Highlight utility redundancy and fiber carrier count. Buyers want proof of 99.99% uptime capability.
Henderson Tech District
4.8% to 5.6% capVacancy
3.1%
Avg Rent (1BR)
$520 per kW powered shell
Growing fast. Switch and other major operators expanding here.
OM Tip
Show proximity to existing hyperscale facilities and available expansion land.
North Las Vegas Industrial
5.2% to 6.1% capVacancy
4.8%
Avg Rent (1BR)
$465 per kW powered shell
Value play. Lower power costs but limited fiber diversity.
OM Tip
Emphasize cost advantages and future fiber build-out plans from carriers.
Airport Vicinity
4.5% to 5.4% capVacancy
2.3%
Avg Rent (1BR)
$615 per kW powered shell
Premium location with excellent connectivity to California markets.
OM Tip
Focus on latency advantages to LA and Bay Area. Include network maps.
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What Your OM Needs to Address
Power Infrastructure Detail
Document every aspect of electrical systems including utility feeds, UPS capacity, generator backup runtime, and available expansion capacity
Data to Include
NV Energy contract terms, current power usage vs capacity, generator fuel type and runtime specs, UPS battery replacement schedules
Cooling System Performance
Show actual PUE performance across seasons and detail cooling redundancy levels
Data to Include
Monthly PUE data for past 24 months, cooling system architecture (N+1, 2N, 2N+1), chiller plant capacity and efficiency ratings
Fiber and Network Connectivity
Map all carrier connections and available dark fiber paths to major markets
Data to Include
List of on-net carriers, fiber route diversity, latency measurements to LA/SF/Phoenix, available cross-connects
Tenant Credit and Contract Terms
Vegas data center leases often include power escalation clauses and expansion options that affect valuations
Data to Include
Tenant credit ratings, lease expiration schedule, power cost pass-through mechanisms, expansion rights and pricing
Regulatory and Utility Relationships
Nevada's data center tax incentives and NV Energy rate structures impact long-term returns
Data to Include
Tax abatement status and remaining terms, utility rate schedule, any special power purchase agreements
Market Position and Competition
Show competitive advantages against Switch, EdgeCore, and other major operators in the market
Data to Include
Competitor proximity analysis, pricing comparison, unique selling propositions like specialized cooling or connectivity
Investment Outlook
Short Term
Strong fundamentals continue through 2026. AI demand keeps absorption high and rents rising. Watch for power grid constraints as crypto mining activity increases with Bitcoin above $85K.
Medium Term
2027-2029 sees continued growth but slowing rent appreciation as new supply comes online. NV Energy's planned grid expansion should ease power constraints. Edge computing buildout favors smaller facilities.
Long Term
Vegas becomes a major western data center hub by 2030. Climate risks manageable with proper cooling design. Water usage regulations could impact expansion but current facilities aren't affected.
Buyer Profile
Hyperscale operators dominating acquisitions above $50M. REITs active in the $15M-$50M range for multi-tenant facilities. Private equity focusing on value-add opportunities under $25M.
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