First Street, a climate risk financial modeling company, released research on June 18, 2026 showing that climate risk is emerging as a critical factor in data center investment performance. The analysis, titled Climate Risk in Global Data Center Markets: Implications for Investment and Performance, examined 97 global data center markets and found that many of the industry's largest and fastest-growing hubs face elevated exposure to flooding, extreme heat, wildfire, wind, and drought.

Global data center capacity has expanded rapidly over the past decade and is expected to nearly double by 2030 as trillions of dollars flow into digital infrastructure to support cloud computing and artificial intelligence. However, the research indicates that while investors have traditionally focused on power availability, connectivity, land access, and demand growth, climate risk remains largely absent from many underwriting and valuation frameworks despite its direct influence on uptime, operating costs, insurance availability, and infrastructure reliability.

Dr. Jeremy Porter, Chief Economist at First Street, noted that location fundamentally determines operating costs for decades: "Where you build a data center determines a large share of what it will cost to run for the next 20 or 30 years. Climate is a big part of that: cooling, water, and reliability all depend on location. But most valuations still focus on growth and treat climate as a secondary concern."

Matthew Eby, Founder and CEO of First Street, emphasized that traditional underwriting approaches are becoming inadequate: "Most underwriting for real assets still uses historical data, but the climate is no longer behaving the way the historical record would predict. As heat, drought, and water stress increase, outdated models simply don't offer a complete view of risk anymore. Investors who incorporate these factors into underwriting and capital allocation decisions will be better positioned to identify resilient markets and avoid mispriced risk."

The full report is available at firststreet.org/research.