As Interest Rates Stay High, Investors Flock to Data Centers and Cold Storage

In 2025, with interest rates still near historic highs, investors are asking: where is real estate capital going?

While office and housing returns have weakened, two asset classes stand out—data centers and cold storage warehouses. Despite tight credit, both continue to attract institutional funds.

Bank of America reports that by June 2025, U.S. data center construction hit an annualized US $40 billion, up 30% year-on-year, a record high. The U.S. cold-storage market is also booming, expected to grow 12.7% annually.

Inflation-Resistant Assets

Data centers and cold-chain warehouses offer long leases, steady cash flow, and inflation protection—qualities prized in a high-rate environment.

Data centers anchor AI and cloud infrastructure; Amazon, Microsoft, Google, and Meta are expanding rapidly. Cold-storage facilities support food and pharmaceutical logistics, and their 10- to 20-year leases, often with inflation-linked rent clauses, give lenders and investors confidence.

Strong tenants, low turnover, and predictable income make these assets stable even as borrowing costs rise. Pension funds and insurers favor them for their low risk and inflation-hedging potential.

Investing Under High Rates

After two years of rapid rate hikes, few expect borrowing costs to fall soon. Investors now prioritize cash-flow stability and sound capital structures over quick returns.

CBRE notes that Europe’s data-center financing increasingly uses securitization and joint ventures to share costs and ease funding pressure. Cold-chain developers apply similar leveraged models, provided income remains secure.

For tenants, longer leases lower financing costs; for investors, fixed-rate loans, pre-leases, and partnerships help maintain returns.

Developing from scratch demands heavy capital and expertise, so new entrants often acquire or co-invest with experienced operators. Lineage Logistics, now the largest U.S. cold-storage company, grew through acquisitions and long-term partnerships with tech and retail giants.

Even in a high-rate world, data centers and cold-chain warehouses remain rare assets that combine stability, durability, and inflation protection—exactly what today’s cautious capital is chasing.