🏡 Climate Risks Are Rising for Data Centers—What That Could Mean for Real Estate and Infrastructure
As demand for artificial intelligence and cloud computing continues to grow, the infrastructure powering that technology faces a new challenge: climate risk. A new study suggests many of the world’s data centers could become increasingly vulnerable to flooding, wildfires, extreme heat, and other weather-related hazards over the coming decades.
According to CNBC, citing a new report from climate risk analytics firm First Street, approximately 79% of global data center capacity is located in areas facing elevated risk from acute climate hazards such as flooding, severe winds, and wildfires. The study also found that more than half of data centers are exposed to chronic climate stresses, including extreme heat and drought, which can reduce energy efficiency and increase operating costs.
💼 Why It Matters
Data centers are long-term investments, often designed to operate for 20 to 30 years. As companies invest billions of dollars in AI infrastructure and cloud computing, location decisions may become just as important as technology investments.
First Street’s researchers argue that many investors still rely heavily on historical weather patterns when evaluating risk. However, they say those models may underestimate future climate conditions, potentially leading to higher insurance costs, operational disruptions, and unexpected maintenance expenses as weather patterns evolve.
🏦 How the Industry Is Responding
Not every data center operator is waiting to react. According to CNBC, some companies are already designing facilities with climate resilience in mind.
For example, Digital Realty has invested in cooling systems that reduce dependence on water. During an appearance on the Property Play podcast, CEO Andrew Power explained that nearly all of the company’s roughly 300 global data centers use either waterless or closed-loop cooling systems, which minimize water loss through evaporation.
Experts also note that protecting the building itself is only part of the equation. Jeremy Porter, chief economist at First Street, says developers should evaluate the broader systems surrounding a facility, including power infrastructure, transportation access, utility reliability, and community resilience. While building upgrades can reduce damage from storms or flooding, surrounding infrastructure ultimately determines how quickly a facility can recover and continue operating.
✍🏼 Where the Greatest Risks Exist
The study found that climate exposure varies widely by region.
According to First Street:
- Asia-Pacific has the highest exposure, with 89% of data center capacity facing elevated acute climate risk.
- The Americas have about 50% of capacity exposed.
- Europe, the Middle East, and Africa have approximately 46% exposed.
Some of the world’s fastest-growing data center markets also rank among the most vulnerable. These include Northern Virginia, the largest data center market in the United States, along with Johor, Malaysia, and Marseille, France. By comparison, Nordic countries were identified as having some of the lowest climate risks for future data center development.
Porter also noted that many of the world’s highest-risk markets are located in the United States, where flooding and wind events present greater concerns than the chronic heat and drought affecting many international regions.
📊 What It Means Beyond the Headlines
As AI adoption accelerates, demand for data centers will likely continue to grow. However, climate resilience is becoming another major factor in where companies choose to build.
For developers, investors, and commercial real estate professionals, evaluating future infrastructure resilience may become just as important as access to power, land availability, tax incentives, and workforce. Markets that combine reliable utilities with lower long-term climate exposure could become increasingly attractive for future investment.
👀 Boots on the Ground
National reports show climate resilience becoming a bigger factor in data center development, but here in Central Florida, infrastructure planning still centers on reliable power, transportation access, and long-term growth. As technology companies evaluate future expansion, communities that invest in resilient infrastructure and thoughtful development may be better positioned to compete for these high-value projects.
Source: According to CNBC’s reporting on First Street’s climate risk analysis, nearly four out of five data centers worldwide face elevated exposure to climate-related hazards, highlighting the growing importance of climate resilience in long-term infrastructure planning.
Read the original CNBC article: Nearly 80% of data center capacity is at elevated risk to climate hazards like flooding and fire, study says