Managing Sustainability Risk in Tomorrow’s Data Centers

Brielle Scott for Market Share Blog | January 28, 2026

With limited supply and a race to secure capacity, data center users today have little leverage to demand sustainable options. However, as the pace of demand slows, occupiers and investors may increasingly prioritize sustainability in their leasing and acquisition decisions.

The NAIOP Research Foundation commissioned a new report, “Managing Sustainability Risk in Data Center Development,” authored by Jeremy Gabe, Ph.D., Capstone Advisors Endowed Professor of Real Estate at the University of San Diego (USD) Knauss School of Business; and Phil Isaak, PE, P.Eng., DCDC, RCDD, SMIEE, data center infrastructure engineer and program/project manager; to examine best practices and emerging concerns in sustainable data center development.

The report identified five major sustainability concerns that developers and investors should plan for in a five- to 10-year investment horizon to maintain market competitiveness:

1. Physical risk resilience
2. Energy efficiency
3. Community integration and engagement
4. Decarbonization
5. Conversion from air-cooled to liquid-cooled ITE

Industry standards (like the ANSI/BICSI 002 Data Center Design and Implementation Best Practices standard) provide developers with a way to evaluate and mitigate potential losses from physical risks. Forward-looking developers also consider risks facing supporting infrastructure. For example, how secure is access for employees or the transport of diesel fuel to the site in the event of a long-term power outage? How resilient is the supporting fiber network?

Common lease structures provide significant financial incentives for owners of data centers to invest in improving operational energy efficiency (thereby reducing carbon emissions and costs from inefficiencies). The report details several examples of design and operational methods that can be used to improve energy efficiency, including high-efficiency transformers and automating cooling systems.