The global race to build AI-ready data centers is reshaping the digital economy, with resource and regulatory constraints now the critical bottlenecks. This is the key finding from global law firm Baker McKenzie’s new report, “Data Centers Unlocked: What’s new and what matters,” released today.
With the global data center market projected to hit $600-700 billion by 2030 and an average annual growth rate of approximately 11%, the report offers a comprehensive, legally grounded roadmap for developers, operators, and investors navigating this high-stakes sector. As AI, cloud computing, and enterprise technology drive unprecedented demand, the report warns that success hinges on integrated strategies to navigating diverse regulatory landscapes, tax regimes, power requirements, and capital structures to ensure scalability and long-term value.
Key Findings
- Financing and Investment: The capital stack for data centers is being reinvented. Traditional models are giving way to blended structures, capital recycling, and the rise of S-REITs, YieldCos, and mega-joint ventures enabling unprecedented deal sizes and rapid scaling as the market races to meet AI-driven demand.
- Tax Considerations: Governments are using targeted tax incentives and new regimes as competitive weapons to attract data center investment. Jurisdictional differences in tax structuring and exit tax implications, demand careful planning at the outset to help ensure compliance and optimize tax efficiency throughout the investment lifecycle.
- Design and Build: Power and land constraints are forcing developers to rethink site selection, delivery models, and risk allocation. The shift toward secondary and emerging growth markets, the rise of critical infrastructure status, and new compliance requirements are redrawing the map for data center expansion.
- Power as a Strategic Driver: Securing clean, reliable, and scalable power is a make-or-break factor for new projects. Grid upgrades, renewables, and other potential solutions to the challenges faced by the power sector are reshaping investment decisions, while regulatory bottlenecks and energy market reforms are determining who can build and where.
- Operations: Geopolitics, AI regulation, and cybersecurity are rewriting the rules for operators, and are also fundamental issues for data center planning. From sanctions and export controls to evolving customer requirements and compliance regimes, the operational playbook is being rewritten for a world where resilience and adaptability are paramount.
The report features deep dives with actionable insights on capital recycling, REIT IPOs, tax structuring, land acquisition, construction, and power supply strategies, giving stakeholders a toolkit for every stage of the data center lifecycle.
Regional Watchpoints
The report also zooms in on regional trends, highlighting how market dynamics, regulatory shifts, and investment strategies are reshaping the data center landscape across the globe:
Asia Pacific:
Asia Pacific remains a hotspot for innovative monetization models and rapid capacity growth. The region has set new benchmarks for data center M&A, with landmark platform sales. Singapore continues to strengthen its position as a regional data center hub, supported by a flexible REIT regime that enables S-REITs to own global assets and encourages the regular contribution of new assets by sponsors.
Europe, Middle East and Africa (EMEA):
Europe’s data center investment pipeline is massive, but the traditional “FLAP-D” markets, in Frankfurt, London, Amsterdam, Paris, and Dublin, are increasingly constrained by power and land shortages. This is shifting growth toward markets such as Madrid, Milan, Warsaw, Zurich, and the Nordics, where demand is rising and new projects are being launched. The Middle East is experiencing a large flow of capital into data center development, driven by national strategies like Saudi Arabia’s Vision 2030 and the creation of regional cloud hubs in Dubai and Abu Dhabi. Across the region, sustainability regulation, grid access, and permitting timelines are hurdles for new projects.
Americas:
The US continues to lead in terms of innovation and scale of data center investment. According to market research, of the USD 6.7 trillion investment required by 2030 to keep pace with the demand for compute power, more than 40% will be invested in the US. The market is currently seeing a shift back to public exits, with REITs and IPOs regaining traction. There is also a trend toward large-scale platform sales and the use of capital recycling structures to fund ongoing development.
The report concludes that in today’s AI-driven economy, power, permitting, and access to capital are now the decisive factors for data center growth. Only those who secure reliable, scalable power and deploy innovative, regionally tailored financing and partnership models will capture the next wave of digital infrastructure expansion. In this new era, technical innovation, access to capital and regulatory agility will separate the winners from the rest.
To access the full report: https://www.bakermckenzie.com/en/insight/publications/2025/12/data-centers-unlocked
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