Data centers: A layered decision

Transcript:

Amy Gromowski:

I'll focus a little bit on the actual data that Cotality has that we can look at that really points to and help us understand the critical geospatial layers, which is existing power infrastructure, available and suitable land, and then that proximity to an economic hub from the housing market perspective and just access. So I'll bring it just to that level of what does that mean? How do we do that?

Maiclaire Bolton Smith:

Welcome to Beyond the Buildings by Cotality. I am your host, Maiclaire Bolton Smith, and I'm just as curious as you are about everything that happens in the property industry. On this podcast, we satisfy our collective curiosity, explore questions from every angle, and look beyond the obvious. With every conversation, we illuminate what is possible. It's no secret that AI is driving data center construction and it's happening fast, but all that compute power needs real world resources, land, power, and water. As data centers pop up, they're running right into residential neighborhoods, stretching local power grids, and raising big questions for surrounding communities. Developers are bumping into grid delays and local opposition. Utility companies are scrambling to project massive power loads, and city leaders are trying to protect local housing markets and infrastructure. So today, we're diving into how property intelligence can help everyone navigate the rapid data center expansion and drive sustainable growth together. So joining me today to break this down is Amy Gromowski, Cotality's Head of Data Science. Amy, welcome back to Beyond the Buildings.

Amy Gromowski:

Thanks for having me, Maiclaire. Great to be back.

Allie Barefoot:

Before we get too far in this episode, here's a friendly reminder about how to see what's coming up next in the property market. To make it easy, we curate the latest insight and analysis for you online. Find us using the handle @Cotality on all of our social media channels. But now let's get back to the show.

Maiclaire Bolton Smith:

So Amy, we've been tracking how AI infrastructure is completely remapping the property landscape. And when you look at the numbers, they really jump out. Cotality found that home prices in smalltowns like Abilene spiked nearly 20% while prices across the rest of Texas actually fell. As expansion pushes into secondary markets, where are we seeing the biggest friction points?

Amy Gromowski:

So as you mentioned, there is friction in home prices like in Abilene, Texas, but the reality is that the entire map is being rewritten. So primary hubs like Northern Virginia, for example, they're capacity constrained. So we are seeing the surge into secondary markets, Denver, San Antonio, there's many others.

Allie Barefoot:

Wow.

Amy Gromowski:

And that is really not about fancy tech zip codes, but it all comes down to grid capacity and land availability. So from a geospatial perspective, the bottlenecks occur at that intersection of power, land, and warehousing where they intersect, that really becomes the perfect storm. So I can talk a little bit about each of those three. For the power, the grid was not built for this level of concentrated demand. And we see that in places like Ground Zero, Loudoun County in Northern Virginia. Back in 2022, that energy company did announce that it couldn't guarantee the power delivery for the datacenter projects until 2026. And they came up with the Golden to Mars project, and that was really just about developing these nine mile transition lines to link local substations that could stabilize that energy loop.

Maiclaire Bolton Smith:

Interesting.

Amy Gromowski:

So that's one friction point. Another is the land, right? We need the land to be able to access power and water. And we've seen that in places like Phoenix, Arizona, that's become a major data centerhub and developers are facing bottlenecks in both of those places for land and water. So on the land side, there's competition for already zoned industrial parcels and those parcels have the neededinfrastructure. Water for cooling is colliding with the local and state level water conservation efforts. So that's really creating some community opposition there and some regulatory hurdles. And thenthere's the housing bottleneck, and we talk a lot about the housing pieces. So you mentioned Abilene, Texas, we're seeing home prices or they did jump 20% and that's because, and we've talkedabout it before, there's an influx of construction workers and operational staff and it just limits the local housing supply.

So these are the things that are coming together to create these friction points.

Maiclaire Bolton Smith:

So from a macro data science perspective, what is the data telling us about where the balance will be found next? What specific geospatial layers, things like land use codes, aerial imagery, orproximity to power corridors, are you evaluating to identify these high potential markets before they even pop up on everyone else's radar?

Amy Gromowski:

Yeah. So I'll focus a little bit on the actual data that Cotality has that we can look at that really point to and help us understand the critical geospatial layers, which is existing power infrastructure,available and suitable land, and then that proximity to an economic hub from the housing market perspective and just access. So I'll bring it just to that level of what does that mean? How do we dothat? So we have really robust geospatial capabilities and that's what's really necessary to be able to find these areas, point to these areas. And so that comes down to understanding parcels, parcelboundaries, as well as the land use codes for those parcels. So understanding agricultural, industrial, commercial, or residential land use and that zoning. We can do things like geospatial distancecalculations. So looking at a parcel and saying, what is that distance to another landmark or to the economic hub, for example, like in Hudson Valley to New York or whatnot, or bodies of water.

We've talked about the importance of water a bit in the land. So understanding spatially those distances, we can do that and that's really important. Aerial imagery is another big aspect that we have,right?

Amy Gromowski:

We're getting refreshed aerial imagery every six months and we're extracting information from that imagery. So being able to see existing structures, characteristics of those structures and changes inland use, you can see that over time. You bring these assets together and that really helps paint this picture around what creates that next, where is that next market that's prime for it. Just looking at changes over time, we talked aboutchange in land use, change in zoning and permits, being able to see that the rate at which those are changing can help us understand and help anyone trying to understand where the data centersmight be ripe is you can see that as clear signals for, hey, this area and community is open for business. They're actively developing and rezoning. Those are some examples. And then lastly, just around the housing, being able to see housing supply and price. Are there stable prices or a lot of fluctuation in prices that really will help usunderstand, helps us see that housing affordability and if an area ripe for data centers would be hitting an affordability crisis.

Maiclaire Bolton Smith:

Interesting. So Quincy, Washington, that's a great example of a win-win where natural climate, affordable land and existing hydropower align. So how do physical, spatial and environmental dataassets help developers find those unique locations where the data centers serve as an economic anchor rather than a burden on the local resources?

Amy Gromowski:

I'd like to focus a little bit on, there is a win-win here. So Quincy, Washington is a good example I think of a win-win. And Quincy, Washington data centers there, that is a good combination of cheaphydropower, naturally cool climate, tax breaks and cheap land. And we haven't really talked about the climate aspect, but going back to power and we've talked about it, Quincy is in Grant County andthe local public utility district owns and operates Priest Rapids and I don't know if I'll say it right, but Awanapum Dams on the Columbia River. So that has created a massive amount of power that itgenerates, those dams generate. And so the infrastructure can load and run there reliably. There isn't a grid strain, so that's great. Cool climate, air climate. So data centers generate a massive amountof heat and therefore they need cooling. The climate there really allows for an efficient cooling with natural outside air and evaporating cooling systems there just naturally from the climate.

So there's a cost efficiency there and just a lower footprint, I'd say right from the demands of the local environment. And then we've talked about the housing affordability and availability. So just there's an abundant amount of affordable land there.

So it's very unlike the overcrowded tech areas. There's a lot of parcels and agricultural flat land that's at a very pretty low cost per acre. So it's got the physical footprint, it has the climate and it hasthe access to power. So these are from a geospatial capability and the data assets perspective and just talking about is this a burden or an anchor, that's a good example of a win-win. So we can find those things, but it's really important just the community support and openness and talking about these geospatial assets, like the things that go into it and why the general concerns thatare real and valid may not apply everywhere. And there can be these places across the U.S. that we can find that good balance.

Allie Barefoot:

It's that time again. Cotality just dropped new numbers about what's happening in the housing market. Here's what you need to know. Everybody's talking about AI. As a result, the cloud isn't so invisible anymore and it's actively remapping the US housing market. While anchor hubs grab headlines, a secondary wave of infrastructure is surging into unexpected markets like rural Arkansas. Driven by this tech influx, the state averaged nearly 84,000 new residents annually, a 6% jump over pre-pandemic levels, pushing home prices in the Little Rock metro area up 8.1% to historic highs.This shift signals that tech growth is no longer just about power grids and cheap acreage. Expansion now depends heavily on local housing capacity and public trust. As billions in tech capital land in smaller communities, developers must evaluate housing availability and local sentiment with the same rigor as power supplies to prove the physical weight of the cloud is worth bearing.

To read the full report, visit cotality.com/insights, and that's a sip. See you next time.

Maiclaire Bolton Smith:

Okay. So one of the biggest development hurdles that we hear about is hidden information. So you would have to think that bringing together all these different geospatial assets into a single sourceof truth will really help developers, power providers and the city leaders really all get on the same page.

Amy Gromowski:

Yeah. I think to really create that win-win situation, I'll focus on the data again, and it is about bringing data together. One of the challenges is disconnected siloed data and all the different entitiesand players that are required to come together to solve these problems and to find those win-win situations need to have the same information.

So the challenge is that the data needed for that holistic view is often siloed. Developers have site plans, utility companies have the grid capacity data, city planners have zoning and housing data. So having platforms that these data assets can come together to be the single source of truth as well as the ability to connect those different data assets, whether it's geospatial and you're talking about parcel level information and distance or it's labor cost information or housing supply, all of these things that we've been talking about today, we need to be able to connect them in a way that is reliable, that single source of truth, and then serve it up in a way that everyone is able to work together to see the same information at the same time

Allie Barefoot:

And

Amy Gromowski:

Know that each other has the same view. And that can create much more productive, expedient and transparent conversation. So it's just a great way to think about how to bring all the stakeholderstogether as well as communicate with communities and people on pros and cons and how to think about all the different aspects that we talked today and bring that out into the open and justcommon single source of truth for all parties involved. So that's I think how we get to a big aspect of how we get to the win-win.

Maiclaire Bolton Smith:

Amy, it's always so great to chat with you. So thank you so much for joining me again today on Beyond the Buildings by Cotality.

Amy Gromowski:

Thanks Maiclaire. Always nice to talk to you.

Maiclaire Bolton Smith:

And thank you for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life. Producer Jessi Devenyns, editor and sound engineer Romie Aromin, our facts guru, Allie Barefoot, and social media duo, Sarah Buck and Makaila Brooks. Tune in next time for another conversation that illuminates the ideas that will define the future.

Allie Barefoot:

You still there? Well, thanks for sticking around. Are you curious to learn more about our guest today? Amy Gramowski is the head of data science at Cotality, leading teams of data scientists and machine learning scientists in developing artificial intelligence and machine learning solutions, including computer vision and generative AI for property related solutions in the real estate, mortgage, and insurance markets. Over the course of her career, Amy has held various AI related roles, including data scientist, client executive, analytics product manager, and most recently as a leader ofAI/ML business development. With 25 years of experience, Amy enjoys working with C-suite leaders on AI/ML strategy, technology leaders, product leaders, and clients to innovate in the property ecosystem.

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