Data center investment strategies that focus on ground-up development in unconventional locations are more complex, and therefore more likely to generate stronger returns, says Mark McComiskey, a partner at AVAIO Capital.
In an extensive conversation with Cool Vector, McComiskey explains that many private capital firms active in digital infrastructure invest in existing assets, or compete for sites in overheated hubs like Northern Virginia. By contrast, AVAIO is simultaneously developing six...
Data center investment strategies that focus on ground-up development in unconventional locations are more complex, and therefore more likely to generate stronger returns, says Mark McComiskey, a partner at AVAIO Capital.
In an extensive conversation with Cool Vector, McComiskey explains that many private capital firms active in digital infrastructure invest in existing assets, or compete for sites in overheated hubs like Northern Virginia. By contrast, AVAIO is simultaneously developing six sites in less competitive markets, positioning itself as data center provider of choice to large customers.
“The best returns come from building infrastructure where it doesn’t already exist,” McComiskey says. “We’re taking on complexity—power procurement, entitlement, permitting—but that’s where the opportunity lies.”
AVAIO’s approach involves incremental risk management—deploying capital only as sites pass key milestones. This method ensures projects are fully de-risked before significant investment, reducing exposure to cost overruns or regulatory hurdles, he says.
At present, AVAIO is bringing to market a diverse portfolio of sites. “Instead of pitching one-off locations, we’re offering AI-focused campuses, cloud deployments, and hyperscaler-ready sites across North America and Europe,” says McComiskey.
For decades, data centers have clustered in a handful of hubs in the US, but AVAIO anticipated grid congestion, and decided to look elsewhere. “In Santa Clara, new power access could take a decade,” McComiskey says. “We secured 100 megawatts of power just 30 minutes outside the city—that’s the kind of forward-thinking strategy this market demands.”
The continued high demand for data center capacity is influencing negotiating dynamics between providers and customers. Customers in need of cloud and AI compute are willing to pay premiums for sites that can deliver in the next 24 to 36 months. “If you can build in 2025 or 2026, you have leverage,” says McComiskey. “If you’re offering capacity in 2030, the power shifts back to the customer.”
With billions pouring into AI-driven infrastructure, some market observers worry the sector is overheating. McComiskey acknowledges signs of speculation—like developers stockpiling electrical components without confirmed projects—but argues that irrational exuberance is still under control. “No one’s building speculative capacity without customers lined up,” he says. “Unlike real estate bubbles, where demand can disappear overnight, AI and cloud computing growth isn’t slowing down anytime soon.”
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