The Forming Data Center Bubble

Apr 11, 2025 • 10 min read

Hudson Yards Developer Goes All-In on Data Centers With $8B Raise and $45B Pipeline Related Cos. launches Related Digital to chase the AI-fueled gold rush, but some fear a bubble is already inflating.

The developer behind New York’s Hudson Yards is taking its skyscraper-sized ambitions to the cloud. Related Cos. officially launched a new business unit, Related Digital, with a jaw-dropping $45 billion near-term development pipeline in the data center space—and it’s looking to raise $8 billion in capital to fund it.

This is no side hustle. The company has already secured $500 million in investor commitments, and it's rolling out its first project—a 64-megawatt expansion in Ontario—this summer. The rest of the pipeline spans across North America, including 1.2 gigawatts in Missouri, 1 gigawatt in Illinois, and 250 megawatts in Wyoming, with a marquee development in Chicago set to host what may become the world’s largest quantum computer, built by PsiQuantum.

“Digital infrastructure is one of the most remarkable growth categories and asset classes that I have seen in my more than 35 years in real estate development,” said Related CEO Jeff Blau, who will also serve as CEO of Related Digital.

The move reflects a broader shift happening across commercial real estate, as developers that once dominated office, multifamily, or industrial assets are now pivoting toward the booming data center market—driven largely by artificial intelligence, hyperscale cloud demand, and the insatiable need for processing power. Related joins a growing list that includes Prologis, which launched its own $8 billion data center business last year, and even Trump family affiliates, who jumped into the sector this February.

Behind Related Digital is a serious bench of industry veterans: Brent Behrman, former CSO at CyrusOne, joins as CIO; Greg Myers, formerly of Vista Equity, is CFO; Erik Egger leaves Prologis to head design and construction; and John Shine arrives from Compass Datacenters. The advisory board boasts big names, including Bill Stein, co-founder of Digital Realty Trust, Phil Horstmann of Ascent, and Miguel Prado of energyRe.

But as with any gold rush, there are concerns about how much is hype and how much is real. Billionaire Alibaba chairman Joe Tsai recently warned of an emerging AI-fueled data center bubble, saying investors may be “building ahead of demand” based on optimistic projections rather than proven, profitable use cases.

It’s a valid concern. Much of the early corporate spend on AI has been heavy on capex and thin on ROI. While every boardroom in America is salivating over ChatGPT-powered workflows and AI-enhanced productivity, real-world implementations have often underdelivered—or worse, gone hilariously sideways. Still, that hasn’t stopped capital from flooding in.

From Related’s perspective, this is exactly the time to strike. The company is betting that hyperscalers and AI infrastructure providers will need not just any space, but deeply integrated, customized campuses—the kind only top-tier developers can deliver. In other words, Related Digital isn’t just slapping servers into old warehouses; they’re designing AI-forward digital infrastructure from the ground up.

With development led through Related Fund Management, the firm’s private equity arm, and a vertically integrated model that touches every aspect of the data center value chain—from site selection to construction to leasing—Related is setting itself up not just as a player, but a category-defining brand in the space.

CenterCheck’s real estate data confirms the momentum: inquiries and investment activity in data center zones are up 38% year-over-year, with suburban markets near major metros like Chicago, Dallas, and Atlanta seeing the highest increase in site acquisition activity. Not coincidentally, these markets align closely with Related Digital’s development targets.

Is it a smart pivot or a classic case of chasing heat? Time will tell. But with $45 billion in the pipeline and the backing of one of America’s most iconic developers, Related Digital is making a big, calculated bet that the future of real estate isn’t up—it’s online.