Data Center Investment in Miami
Miami's data center market is on fire. Latin American connectivity drives demand while AI workloads create capacity crunches. Cap rates compressed 75 basis points in the last 18 months as hyperscalers hunt for edge locations. Power's getting tight - FPL's struggling with grid capacity in Doral while developers chase new sites in Medley. International capital loves the story but due diligence is getting brutal. Buyers want detailed power studies and cooling redundancy plans before they'll even tour.
Market Context
Cap Rate Range
4.25% to 6.75% depending on tenant credit and power capacity
Current Vacancy
Sub-5% for powered shell, 15-20% for raw space
Rent Trend
Triple net rents up 12-18% annually, power cost escalations driving increases
Absorption
2.4 MW absorbed quarterly, mostly hyperscale and financial services tenants
Price Per Unit Trend
$1,200 to $2,800 per kW for stabilized assets, record highs in Q4 2025
Transaction Volume
$1.8B in trailing twelve months, 40% increase year-over-year
Submarket Analysis
Doral
4.5-5.8% capVacancy
3% powered space
Avg Rent (1BR)
$18-24 PSF NNN
Power constrained but prime fiber connectivity
OM Tip
Detail FPL substation capacity and any grid upgrade commitments
Medley
5.2-6.2% capVacancy
8% powered space
Avg Rent (1BR)
$15-22 PSF NNN
Emerging hub, better power availability
OM Tip
Emphasize zoning approvals and utility infrastructure timeline
Hialeah
5.8-6.8% capVacancy
12% powered space
Avg Rent (1BR)
$14-20 PSF NNN
Value play with development potential
OM Tip
Address hurricane preparedness and backup generator capacity
Downtown/Brickell
4.2-5.5% capVacancy
2% powered space
Avg Rent (1BR)
$22-28 PSF NNN
Premium pricing for financial services proximity
OM Tip
Highlight carrier hotel connectivity and low-latency trading infrastructure
Miami Lakes
5.5-6.5% capVacancy
15% powered space
Avg Rent (1BR)
$16-21 PSF NNN
Enterprise-focused, steady absorption
OM Tip
Include enterprise tenant retention rates and expansion history
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What Your OM Needs to Address
Power Infrastructure Detail
Include utility letters confirming available capacity and any expansion rights
Data to Include
MW capacity per hall, UPS specifications, generator fuel contracts, PUE by season
Cooling System Redundancy
Miami heat requires robust HVAC with hurricane backup capabilities
Data to Include
Cooling redundancy level (N+1, 2N), chiller efficiency ratings, emergency cooling procedures
Fiber Connectivity Map
Latin American connectivity is a key differentiator for Miami facilities
Data to Include
On-net carrier list, submarine cable access, cross-connect pricing, latency to major exchanges
Hurricane Preparedness
Storm hardening and business continuity planning affects insurance and tenant retention
Data to Include
Building storm rating, backup power duration, fuel supply agreements, historical uptime during storms
Tenant Credit Analysis
Mix of hyperscale, enterprise, and international tenants affects risk profile
Data to Include
Tenant credit ratings, lease expiration schedule, expansion options exercised, payment history
Expansion Capacity
Land availability and zoning for future phases drives premium valuations
Data to Include
Available land area, zoning approvals status, utility capacity for expansion, construction timeline estimates
Investment Outlook
Short Term
Supply constraints keep cap rates compressed through 2026. New construction costs hit $8-12M per MW. Existing facilities with available power capacity see immediate value creation opportunities.
Medium Term
2027-2029 sees new supply in Medley and western submarkets. AI demand continues but power grid investments lag. Edge computing requirements drive smaller facility development. Cap rates may tick up 25-50 bps as supply increases.
Long Term
Miami solidifies as Latin American digital gateway. Hurricane resilience becomes table stakes as climate risks increase. Consolidation likely among smaller operators. Expect continued institutional capital interest but more selective underwriting.
Buyer Profile
REITs and institutional funds dominate above $50M. Hyperscale operators acquiring development sites directly. Private equity targeting value-add opportunities in secondary submarkets. International capital focused on gateway connectivity assets.
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