Author: Brad A. Molotsky

As part of our ongoing effort to focus on issues, incentives, acquisitions, joint ventures and the general comings and goings on in the data center arena, we thought it might be helpful to our readers to summarize some of the incredible deals that are occurring in the general data center marketplace.

While far from novel as we are aggregating stories of interest, given the speed and volume of deals, we hope that our quick overview of transactions might be helpful to those interested in learning more about the data center marketplace. If any of the stories pique your curiosity, feel free to email us and we will be happy to share information on the applicable article so you can dive deeper.

In no particular order, we saw the following over the last few weeks since our last posting:

• Ormat Technologies inked a 150 Million MW Power Purchase Agreement with NV Energy to support Google Data Centers – clean energy procurement.
• Louisiana – Amazon to invest $12 Billion in data center campuses in Caddo Parish, Louisiana to support cloud computing and AI.
• Virginia – earlier this week, the Virginia Senate budget eliminates data center tax break to create potential $1B funding source for energy cost reduction.
• Anthropic announces $7 Billion Dollar deal with Hut 8 for a 15-year capacity agreement.
• Texas – Soluna announces a partnership with Metrobloks for Kati 2 as part of a large scale digital infrastructure investment plan.
• Pennsylvania – 1.4 Million square foot data center proposed in Montgomery County,
• Delaware – 6 Million square foot facility proposed for Delaware City, Delaware.
• Clearway Energy Group has signed 3, 20-year power purchase agreements with Google to provide Google with 1.17 GW of “carbon free energy” in Missouri, Texas and West Virginia.

The Bits N Bytes Corner: This, friends, is a mere sampling of deals. Our goal here is to continue to share deals in the space and where they are happening and, as the year progresses, we will share structure, power supply and financing strategies for those interested.

Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of data center, digital infrastructure, real estate and incentives related alerts, blogs and advice on various topics. Please see our website for a list of all available articles and blogs.

If you have any questions or thoughts, please contact Brad A. Molotsky, Robert Montejo, Darrick Mix, Veronica Law, Ben Warden, Paul Josephson or any of the Duane Morris lawyers you regularly engage with.

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The New Jersey Assembly has joined a growing list of legislative bodies nationally that are taking a look at and working on legislation to attempt to make larger users, including data centers, responsible for some of the cost of continued increasing rates that are currently being borne by residential customers. In other words, various legislative bodies, including New Jersey, are drafting and reviewing bills, like A-7961R (the “Bill”), that seek to create a separate tariff that will apply to large energy consumers separate from the rate that will apply to a typical residential consumer. The stated goal of the legislation is to seek to hold large energy consumers responsible for the increased cost of electricity that is attributable to their desired need and use of electricity.

Under A-7961R, a “large load customer” is defined to mean a commercial customer for retail electric service that is a centralized facility or facilities with a monthly demand of more than 100 megawatts (MW). The target of the legislation is, of course, among other things, planned new data centers with more than the 100 MW of monthly demand.

The Bill requires that within 180 days after the effective date, that each electric public utility would be required to file an application with the Board of Public Utilities to establish a tariff for the provision of electricity to large load customers.  The Bill goes on to state that the tariff should be designed to: 

     (1)   ensure that other electric public utility customers do not subsidize large load customers and all costs attributable to the electric public utility’s large load customers are assigned to the large load customers as determined by the PUC;

     (2)   contain protections necessary to ensure that other electric public utility customers are not placed at risk for paying stranded costs associated with the electric public utility serving the large load customer; and

     (3) incentivize large load customers to develop and utilize methods to increase energy efficiency, including through the use of technologies that capture and utilize the heat produced by the large load customer.

The Bill would also require that within one year after the effective date, applicable electric public utilities would apply the tariff developed under the Bill as approved by the PUC, to each large load customer within the electric public utility’s service area. 

The current draft of the Bill also seeks to require that any large load customer be required to provide financial guarantees of their ability to pay at least 85% of the service requested for a period of no less than 10 years. This provision is intended to make sure that the capacity being requested from the PUC is actually used by the large load customer and that the PUC is not left with a stranded cost for creating the capacity which is not used.

Bits and Bytes – While the Bill is in its early stages (currently being worked on in the Assembly Telecommunications and Uility Committee) and has not received a formal vote in the Assembly or the Senate, it is expected that some form of the Bill will indeed make it out of both bodies of the Legislature and be sent on the Governor. Gov for signature. Governor Sherrill ran on, among other things, reducing electricity rates to the residential consumer base so it is highly likely that the Governor will be supportive of this type of targeted rate-based allocation to attempt to have the user who needs the capacity pay for the costs to add the capacity to the system.

This type of specific targeting of large industrial users of electricity is not a new thing, rather, it has been building over the last two plus years as various states have seen electricity rates rise over 21% since 2023 depending upon what market they are in. These states are looking for ways to appropriately and fairly allocate costs while not killing the golden goose that is data center development given the ratables the sites will create and the construction jobs that tend to be a part of this every growing sector. We will continue to keep an eye on A 7961R iun NJ and on SB 253 in VA and other state proposals that are targeting data centers and will attempt to keep you, our readers, up to warp speed.

Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of data center, digital infrastructure, real estate and incentives related alerts, blogs and advice on various topics. Please see our website for a list of all available articles and blogs.

If you have any questions or thoughts, please contact Brad A. Molotsky, Robert Montejo, Darrick Mix, Veronica Law, Ben Warden, Paul Josephson or any of the Duane Morris lawyers you regularly engage with.

Earlier this week, the Virginia Senate proposed SB 253 – “The Fair and Affordable Electric Rates Reliability Act”. This Bill joins other states that are looking for solutions to ever increasing electric bills and who are targeting data centers as the perceived party that is causing the rate increases.

It is a bit too early to tell if the SB 253 makes its way through the legislature, but it is indicative of approaches being considered and acted upon by various states. SB 253 which is supported by Dominion Energy (a large power generator in Virginia and beyond), would shift the way certain large consumers pay for electricity. Dominion Energy is a power supplier and creates its own energy at the power plants it owns and controls but then goes to the open market to buy electricity from the grid at auction for any excess capacity it needs and then allocates these excess costs to its customers who use the electricity.

Under the Bill proposed by Senator Louise Lucas, average residential electricity bills would decline 3.25% on average and between 2.9% and 3.7% on average for commercial customers. This reduction would be paid for by increasing the rates paid by data centers and other large consumers of electricity by approximately 15% according to the Senator’s white paper on the Bill.

In short, the Bill would require that data centers and other big users of electricity cover the cost incurred to construct power stations, substations and high voltage lines to serve the data centers (even if these costs are for off-site improvements). These rate charges would become effective January 1, 2027, and would apply to any customers with demand requirements of 25 megawatts (MW) or more or with annual electric load factors of 75% or more. As data center users tend to be in the over 25 MW to 1,000 MW (or 1 gigawatt) user category, the bill is targeting these entities to pay for the required infrastructure needs they are creating via their demand profile.

Interestingly, “any customer of a Phase II Utility” is defined under SB 253 as an entity that has 200 or more full time employees as of January 1, 2026,that has the demand attributes mentioned above. It will be curious to see what entities in the manufacturing and industrial arenas actually have over 200 employees required to trigger the applicability of SB 253.

The Quantitative/Qualitative Corner: This type of specific targeting of large industrial users of electricity is not a new thing, rather, it has been building over the last two plus years as various states have seen electricity rates rise over 21% since 2023 depending upon what market they are in. These states are looking for ways to appropriately and fairly allocate costs while not killing the golden goose that is data center development given the ratables the sites will create and the construction jobs that tend to be a part of this every growing sector. We will continue to keep an eye on SB 253 and other state proposals that are targeting data centers and will attempt to keep you, our readers, up to speed.

Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of data center, digital infrastructure, real estate and incentives related alerts, blogs and advice on various topics. Please see our website for a few list of all available articles and blogs.

If you have any questions or thoughts, please contact Brad A. Molotsky, Robert Montejo, Darrick Mix, Veronica Law, Ben Warden, Paul Josephson or any of the Duane Morris lawyers you regularly engage with.

As part of our ongoing effort to focus on issues, incentives, acquisitions, joint ventures and the general comings and goings on in the data center arena, we thought it might be helpful to our readers to summarize some of the incredible deals that are occurring in the general data center marketplace.

While far from novel as we are aggregating stories of interest, given the speed and volume of deals, we hope that our quick overview of transactions might be helpful to those interested in learning more about the data center marketplace. If any of the stories pique your curiosity, feel free to email us and we will be happy to share information on the applicable article so you can dive deeper.

In no particular order, we saw the following:

• Georgia – saw a $3.7 Billion-dollar data center proposed in Spalding County, Georgia;
• Texas – saw a $1.5 Billion-dollar data center proposed in San Morcos, Texas;
• Mississippi – saw Elon Musk’s XAI to invest over $20 Billion-dollars in a Southaven, Mississippi data center project;
• Illinois – saw Hut 8 move to obtain zoning approvals on a $5 Billion-dollar data center in Logan, Illinois;
• Europe – GTR obtained $2 Billion-dollars from KKR and Oak Hill Capital to expand their data center presence in Europe;
• Capacity – estimates were issued showing data center capacity growing to over 200 Giga Watts by 2030, a massive increase;
• Ohio – saw a $1 Billion-dollar, 500,000 SF data center being proposed in Scioto County, Ohio;
• Pennsylvania – saw a $15 Billion-dollar, 16 building, 700-acre complex proposed in Carlisle, Pennsylvania;
• Michigan – saw a $1 Billion-dollar data center proposed by Microsoft in Lowell Township, MI;
• Google’s parent company, Alphabet, announced plans to acquire Intersect, a data center and energy infrastructure solutions company;
• Capacity – data centers represented 40% of the PJM power capacity costs at the last PJM auction;
• Washington, DC – Bisnow is hosting their National Datacenter – Construction Design, and Development conference in Washington, DC on February 18, 2026 – 7:30 EST; and
• Iowa – Meta announced a purchase of a 328- acre site in Davenport, Iowa that is likely to be the home of a large data center.

The Quantitative/Qualitative Corner: This, friends, is like one week’s worth of deals – yes, a fast moving, large dollars being discussed and spent type of hyper frenzied marketplace. Our goal here is to continue to share deals in the space and where they are happening and we will share structure, power supply and financing strategies as the year progresses for those interested.

Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of data center, digital infrastructure, real estate and incentives related alerts, blogs and advice on various topics. Please see our website for a few list of all available articles and blogs.

If you have any questions or thoughts, please contact Brad A. Molotsky, Robert Montejo, Darrick Mix, Veronica Law, Ben Warden, Paul Josephson or any of the Duane Morris lawyers you regularly engage with.

Earlier this morning (June 3, 2025), I had the pleasure to moderate a panel at a Philadelphia Adaptive Reuse convening hosted by Bisnow.  My panel consisted of local/regional experts and was comprised of German Yakubow, President of Haverford Square Properties, Phil Balderson, CEO of Odin Properties Jason Scholl, President of LK Miller and Christopher Horch, Associate Partner JB&B.

The discussion initially focused on the various demand drivers for adaptive reuse in Philadelphia, including:

1. Large stock of older buildings;
2. Return to work mandates at many businesses including the City itself;
3. Availability of easier to adapt medical and industrial buildings;
4. Tenant preferences for character and a sense of history; and
5. Philadelphia’s 10-year, 100% real estate tax abatement fully applying to adaptive reuse

We also chatted about whether Philadelphia was in a unique position to capitalize on this type of adaptive reuse work with the panelists concluding that while Philadelphia was, in fact, NOT unique as compared to Boston, NYC, Baltimore or DC, the one thing Philadelphia does have at the moment that the other cities do not have is an ease of permitting and development approvals for older buildings and a lower cost of acquisition than the other cities. Ease of permitting was a bit surprising candidly to most in the audience as this is not often the case with the City, but the panel was unanimous in their praise of the City when it comes to adaptive reuse timing and approvals.

When asked to focus on the biggest surprises to avoid, our panelists were quick to remind the audience that despite what they may hear, it is very hard to reuse the systems infrastructure in older buildings and it is better to plan on a gut rehab of lighting, electrical and HVAC in your pro forma.  Sage counsel.  The MEP and GC on the panel further stated that it is better to roll with what the building has to offer and meet it there than fight what is there and force it to work.  In short, make sure your pro forma and your budget assumptions and scope adequately address lighting, HVAC and electrical at a minimum.

When reviewing what types of buildings they like to hunt for, our developers indicated that a square building with good window lines and access to light is what tenants are looking for so they tend to stay away from deep buildings with big cores and prefer industrial or old schools that tend to provide better floor plates than older churches and office buildings (which are tricky when it comes to running plumbing).

As far as costs go, I was a bit surprised to hear from all of the panelists that they are not overly concerned about tariffs and have been “ignoring the noise” that is coming out of DC regarding the on again/off again tariffs.  They acknowledged that construction costs have gradually increased since Covid, but they have not sky rocketed.  Their bigger concern was on longer lead time items on certain hard costs like cooling towers and switch gear that can still take up to 50 weeks to obtain and, in certain instances, getting the local utilities confirmation of specific times that lines would be run from the curb to the building, which can take multiple months rather than weeks.

All of our panelist were of the view that despite what might or might not come out of DC federally on energy efficiency and sustainability, that the customer is in fact interested in lower cost utilities and that owners are now focusing more and more on life cycle costing analysis of systems vs. using a simple payback period which fails to take into account future savings on energy consumption in an environment where utilities costs of energy are increasing 26% this coming summer.

Moreover, despite the de-emphasis federally on renewables and sustainability with the new Administration, all of our panelists agreed that their companies and their tenants all value efficiency and sustainable attributes of buildings, in particular when there is a return on investment for the installation – e.g., lighting, HVAC, building cladding that leads to less consumption of energy and therefore less cost to the tenant at the property.

Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of real estate and incentives related alerts, blogs and advice on various topics. Please see our website for a few list of all available articles and blogs.

If you have any questions or thoughts, please contact Brad A. Molotsky, Paul Josephson, David Amerikaner or any of the Duane Morris lawyers you regularly engage with.

Last week I had the honor of moderating a super panel at the MidAtlantic Real Estate Journal and the Businesses Committed to Southern New Jersey Annual SNJ Commercial Real Estate Forecast in Mt. Laurel. The panel consisted of Joseph J. Aristone, EVP and Chief Revenue Officer of PREIT, David J. Fleming, Director of Engineering at Marathon, Dan McGovern, SVP at CBRE, Shimon Kanter, Principal at SMK Storage and Kirk Miller, Sr. Director at Cushman Wakefield.

The key takeaways from the wide-ranging conversation included:

• Retail – there has been a flight to quality in the last 3 years; COVID sped up the disruption already occurring with at home purchasing habits but became a facilitator as well as it culled out some of the less well capitalized companies. Much of the strip retail continues to be held by private owners while the larger malls tend to be owned by the public companies. Rents in quality malls continue to be around $90-100 psf with rents in most Class A strip centers in SNJ being around $20 – $20 psf. Tenants are asking for better and more reserved parking closer to stores as amenities.
• Office – despite what you hear on the news and in the papers, office is far from dead; there has been a flight to well capitalized owners and the last 2-3 years have represented a super time to buy assets if you have some stones and equity capital. Office in SNJ which was dominated by the REITs during the early 2000s, is now predominantly owned by private owners. Rental rates for A product range from $21 psf to $25 plus electric in particular markets and have not moved much in the last 15-20 years, creating a squeeze on returns as costs to operate continue to increase. Vacancy has continued to reduce from 23% to approximately 15% in early 2025, a good sign. Tenant Improvement dollars continue around $25 psf for a 5-year deal and $40-50 for a ten-year deal with good credit. Tenants are asking for fitness centers, return of lobby cafes, walking trails and good property managers.
• Self-Storage – COVID created a bump in a marketplace already doing fabulously well and drove occupancy to the mid 90% with rents in the $1.50 psf range – unheard of previously. Currently there is a bit of backlash in suburban communities at the moment with occupancy trending down into the 80s and rents around $1.05 psf. Many projects have been done in SNJ by private owners while the REITs continue to make inroads in NJ. 1,200 buildings in NJ were built in 2023, a record for this product type; Expected deliveries in 2025 are down to a more manageable 300 buildings while suburban towns begin to push back on more deliveries. Tenants are looking for excellent lighting and safety.
• Industrial – it has been on an amazing 20+ year ride; however, the marketplace has been very volatile over the last 3 years; COVID created an occupancy bump and an increase in pricing for owners; this marketplace has moderated a bit in the last year plus with occupancy down a few hundred basis points but still in the low 90s. Most of SNJ product is now institutionally held by public companies and institutional owners. 2025 looks like a year to be a tenant with tenant improvement allowances of approximately $8 psf depending on credit but this is likely to be short lived as interest rates decline. Tenants continue to look for the 3 P’s – power, PILOTs (i.e., reduced taxes) and Public Utility availability.
• Construction – again, despite what you have been reading, there has been a lot of construction over the last 3-4 years with many having plans finalized and permits finalized to take advantage of hoped for reduction in interest rates later this year.
• Data Centers – continued growth in Southern NJ but access to redundant sources of power are slowing growth in this sector in NJ.

On the sustainability front, despite what the de-emphasis federally with the new Administration, all of our panelists agreed that their companies and their tenants all value efficiency and sustainable attributes of buildings, in particular when there is a return on investment for the installation – e.g., lighting, HVAC, building cladding that leads to less consumption of energy and therefore less cost to the tenant at the property.

Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of real estate and incentives related alerts, blogs and advice on various topics. Please see our website for a few list of all available articles and blogs.

If you have any questions or thoughts, please contact Brad A. Molotsky, Paul Josephson, David Amerikaner or any of the Duane Morris lawyers you regularly engage with.