🧠 Turning Old Warehouses into Gold: How to Start Investing in Data Center RE

[Eduardo Cambil]

Hey everyone 👋

I’ve been deep-diving lately into a niche that seems to sit right at the intersection of real estate, technology, and infrastructure — data centers.

We all know residential and multifamily can build wealth, but the more I study cash flow models in the U.S., the more I realize how powerful industrial properties can be — especially when repurposed for digital infrastructure like AI compute, edge storage, or colocation.

I’m currently researching how to get started in this space, so I wanted to share what I’ve learned so far and get your insights.

💡 The Opportunity

Traditional warehouse leases might rent at $0.80–$1.50 per sq. ft. per month.
But when you retrofit a space for server racks, fiber connectivity, and redundant power, those rents can easily jump to $4–$8 per sq. ft. per month — or even more if you lease to edge-compute operators or Web3/AI startups.

That’s the kind of industrial arbitrage that could turn a $400k–$800k property into a 6-figure monthly cash flow machine.

🔍 Areas to Study Before Jumping In

Here’s the roadmap I’m currently following to understand the space better:

1. Power & Zoning

   • Target properties with 3-phase 480V power and capacity for at least 1–2 MW (utility upgrade optional).

   • Zoning: industrial light/medium (M-1/M-2) or “data processing center” permitted use.

   • Check local grid stability, cooling needs, and climate resilience.

2. Connectivity

   • Fiber access is everything. Look for proximity to Tier 1 providers (AT&T, Lumen, Verizon).

   • Map out “dark fiber routes” — some counties and old industrial parks are sitting right on them.

3. Location Economics

   • Low energy cost = higher margins.

   • Best states (so far): Texas, Georgia, Alabama, Ohio, Utah, and Missouri.

   • Bonus: tax incentives in data-center-friendly states like Virginia or Nevada.

4. Design & Conversion

   • Focus on “powered shells”: basic infrastructure (cooling, power, racks).

   • Partner with small hosting providers or mining companies to lease in bulk.

5. Financing Options

   • SBA 504 loans (only ~10% down if you own the operating company).

   • DSCR or asset-based financing once the first lease is in place.

   • Incentives: some states give credits for energy-efficient retrofits or tech infrastructure.

📈 The Business Model (in simple terms)

• Phase 1: Buy an older warehouse <$1M.

• Phase 2: Invest ~$150k–$250k in power upgrades, HVAC, and security.

• Phase 3: Lease out racks or entire rooms to tech tenants.

• Phase 4: Refinance at the new appraised value (cap rate compression = wealth).

Done right, a single small facility can net $40k–$70k/month, while the property value triples.

🧭 My Next Step

I’m currently analyzing a few markets (Dallas–Fort Worth, Huntsville AL, and Columbus OH) and talking to brokers about properties under $1M that already have decent power access.

I’d love to hear from anyone who has:

• Invested in industrial-to-data-center conversions

• Worked with colocation or mining tenants

• Experience with utility upgrades or zoning for high-power facilities

Question for the community:
If you were starting from scratch in this space — what would you focus on first?
Power access, connectivity, financing… or partnerships with operators?

Would love to hear your experiences or warnings before taking the leap.

— Eduardo Cambil

[Jason Grey]

Super interesting thread. A few quick adds from the Huntsville, AL metro:

We’ve got several vacant stand-alone boxes (former Neighborhood Walmart / Dollar General types) with ample parking, truck access, and (often) solid existing power corridors. Those check a lot of “powered shell” boxes if you can validate a few things up front:

• Power: Confirm 3-phase 480V, available capacity, and utility upgrade timelines/costs. Ask for historical demand at the meter if possible.

• Connectivity: Verify nearby fiber routes and whether a second carrier can provide diverse entry for redundancy.

• Cooling Strategy: Mix of DX/CRACs or in-row with hot aisle containment; these boxes can work well with compartmentalized rooms.