CBRE's Brian Pankratz discusses demand for data center land in a Q&A.

Data center developers are competing for land with sufficient power infrastructure, development potential and municipal approval as demand for computing capacity grows. Brian Pankratz, a CBRE senior vice president and Twin Cities land broker, says zoning restrictions and moratoriums are shaping site searches, while infrastructure, housing starts and apartment absorption help signal where future development will occur.

**The Blueprint**

CBRE's Brian Pankratz says data center buyers prioritize land with current or future power capacity and supportive municipal zoning.

Data center demand is tightening the supply of suitable sites, according to a recent CBRE outlook.

Pankratz markets land to home builders, apartment developers, industrial and retail users, and senior housing groups.

He points to housing starts, apartment absorption and infrastructure investment as indicators of future land demand.

Just this last week, at least two city councils in the Twin Cities had conversations about what data center regulations should look like.

The Minneapolis City Council considered an ordinance that would zone for and create guidance around data centers. Eagan, which is earlier in the process than Minneapolis, held an informal discussion among its council and staff about what direction the city should take its ordinance, as Finance & Commerce reported earlier this week.

Data centers are among the most closely watched issues a city can take up right now. A CBRE outlook estimated that over the next six months to a year, land for data centers is going to become scarcer and more expensive.

How do brokers go about selling this land? To discuss the topic, Finance & Commerce sat down with Pankratz, a CBRE senior vice president. As a land sales broker, Pankratz's work spans multiple asset types, not just data centers.

"We represent a variety of sellers. Those include one-off individuals who have inherited land, farmers, corporations selling excess land," he said. "Some buyers we work with are national homebuilders, apartment groups, industrial and retail developers, senior housing groups."

*This interview has been edited for length and clarity.*

**What kind of properties do you typically broker, and who are you marketing to?**

We look at everything from infill redevelopment properties to property on the fringes that is currently farmland and will be developed into a housing track, industrial or commercial projects, and anything and everything in between.

**Can you talk to me about your sub-markets?**

A lot of the undeveloped land is located in the second-, third- and fourth-ring suburbs at this point. I don't focus on a certain geographic location. I have listings and am doing deals in the Rochester area, western Wisconsin, the Twin Cities, the northwest, east and south metro, and everywhere else where growth is happening: where there's infrastructure for new development, and where there's demand from a homebuilder, apartment developer or retail user.

**Can you explain what powered land is?**

Powered land is basically undeveloped land. There are redevelopment sites, but our sites are the ones that have the power capability, whether today or tomorrow, to serve new development, primarily data centers that are looking for large amounts of power from the local utility. That could be Dakota Electric, Xcel, a municipality or anybody else providing power.

It's something where somebody could come in and develop a project, and the land is powered to whatever that user may or may not need and can be put into production.

**A recent CBRE outlook report speculated that data center moratoriums, or "near-term regulatory friction," combined with demand for data centers, is making the cost of available sites "constrained." What do you make of this analysis?**

What I can tell you is that data center demand for land is similar to homebuilders' demand. They're going to where there's demand, where there's infrastructure to develop, and where the municipality will allow it to go. The zoning, as we previously talked about, needs to be available.

Everybody's got their computer, their iPhone, their iPad. Everybody wants information yesterday. The demand for data centers and data is not going to go away. It's just a matter of getting data centers built in a manner that works with municipalities, neighbors and others. It's not an easy solution, but there needs to be one for economic growth, development and infrastructure improvements for the whole.

**Data center moratoriums have been instituted in cities. How do you monitor those situations, and how does that affect how you market properties?**

One of the first conversations that takes place when somebody is looking is with the municipality, to see what moratoriums or restrictions are in place and what zoning would work for a potential user or developer. Municipalities sometimes have restrictions or moratoriums on things other than data centers, too. It's nothing new.

**Lakeville has a housing moratorium right now.**

Yep. You just have to go to where the opportunities are. In Minnesota, the opportunities that have come from data centers are pretty good. We need economic development for construction growth, the property tax base and other things. Are you going to see one on every corner? Probably not. But should there be development of additional ones? There will be, in places that make sense.

**You spent some time in Las Vegas working for Colliers. How did those initial years in Nevada influence your time brokering in Minnesota?**

I'll step back even farther. I grew up the son of a homebuilder, so I walked a lot of models on weekends and drove to a lot of land parcels with my dad. He was a homebuilder and developer for a number of companies while I was growing up in the Arizona and Palm Springs area. I grew up with that.

Starting in Las Vegas, working for Colliers out of school, I did a lot of industrial leasing and sales, along with land sales. Las Vegas is a quick-moving market. I was there during one of the great growth periods, from 1999 to 2005. The amount of infrastructure and development that took place along the Las Vegas Strip led to industrial demand, housing growth and apartment growth. It was unbelievable.

Municipalities operate in different manners in different states, and the difference between Las Vegas and Minnesota is quite substantial. People buy a lot of speculative land in Las Vegas. In Minnesota, people typically don't speculate on land; they buy it once they receive entitlements.

**When you're looking six to 18 months down the line, what indicators do you watch for your side of the market?**

I look at new housing starts. I look at apartment absorption. I look at where new development is going: where homebuilders are starting new communities, and where new apartment buildings are being started.

For example, in Rochester right now, there are eight to 10 cranes in the sky from all the new development spurred by the Mayo expansion, with funding from the Destination Medical Center. There's a ton of activity going on down there, despite higher interest rates. A couple of new apartment buildings have gone up, and the city is providing economic incentives to develop and grow.

Will other communities do the same to get development going around the Twin Cities? We'll have to see how that goes. Or will the Met Council provide economic incentives for the different counties? That's something we'll have to watch.