Data Center Financing

Data center financing is significantly more specialized than conventional industrial lending. Lenders evaluate power capacity (megawatts), redundancy levels (Tier classification), cooling infrastructure, connectivity and fiber access, tenant credit quality, and the cost of power in the local market. The capital-intensive nature of data centers and specialized build-out requirements mean higher per-square-foot values and different underwriting metrics than standard warehouse or distribution space.

Data center permanent loan rates range from 5.25% to 7.25% for stabilized, leased facilities with creditworthy tenants. Single-tenant data centers leased to hyperscalers or investment-grade enterprises receive the most competitive rates. Bridge and development financing ranges from 7.00% to 10.00%+ depending on the lease status and tenant profile.

Due to the capital-intensive nature of data centers, most lenders set higher minimums than conventional CRE. Bank and life company permanent loans typically start at $5M-$10M, while CMBS and institutional lenders often require $10M+ loan amounts. Edge and smaller colocation facilities may access financing starting at $2M-$5M from regional banks.

Yes. Ground-up data center construction financing is available from banks, debt funds, and specialty infrastructure lenders. Lenders typically require pre-leasing commitments from creditworthy tenants, experienced development sponsorship, and demonstrated power availability. Construction loans cover 60-70% of total project cost with interest reserves for the build and lease-up period.

Lenders favor data centers with long-term leases (10-20 years) to credit-rated tenants, adequate power infrastructure with utility commitments, Tier III or IV redundancy, diverse fiber connectivity, and location in established data center markets with favorable power costs. The essential nature of digital infrastructure and high switching costs for tenants provide strong downside protection.