On a Phoenix highway, cranes dominate the skyline above an expanse exceeding 60 football fields. The initial phase of constructing five massive bunkers is underway. Meanwhile, engineers, situated thirty miles away, are designing another facility on 400 acres, nearly tripling the size of the Mall of America and transforming the land’s agricultural heritage. If the envisioned developments unfold as intended, both locations will host numerous computers processing colossal volumes of data, fueled by energy equivalent to that required by hundreds of thousands of households.
This represents Blackstone Inc’s gamble on the AI revolution. Following its acquisition of data center operator QTS for US$10 billion in 2021, the largest private equity firm globally is accelerating the expansion of one of the leading landlords for technology giants. Blackstone is financing the construction of extensive structures designed to meet essential computing demands, concurrently influencing the transformation of communities throughout the United States.
This aligns with the traditional Blackstone strategy for real estate, constituting the most significant component of its US$1 trillion portfolio. The company identifies areas where there is a growing demand for properties but insufficient supply to meet it. Subsequently, Blackstone channels billions of investor dollars into constructing substantial property holdings strategically positioned to command substantial rents and secure a significant market share. This approach has been applied across various sectors, ranging from warehouses to suburban residences.
In this instance, the scarcity revolves around the structures essential to support the digital infrastructure of contemporary living, and since the acquisition, the demand has surged. With the ascent of the artificial intelligence industry, major players like Metas and Microsoft are increasingly depending on property owners not only for physical space but also for crucial electricity to power machines that train software in deciphering patterns from an abundance of text, images, and videos. Blackstone currently asserts that its investment in QTS might stand out as one of the most lucrative in its history.
