The commercial mortgage backed securities (CMBS) market, traditionally financing offices, apartments, and malls, is being transformed by a surge in data-center deals, introducing new risks for investors. Key concerns include power availability, grid constraints, cooling needs, computing density, and tenant concentration among a few secretive hyperscalers. About $17 billion of data-center CMBS has been issued since 2025—more than triple the prior two years—making data centers roughly 8% of new commercial property bond deals.

Industry veterans like Alex Killick of CWCapital Asset Management and Steven Jury of Axonic Capital are revamping risk-assessment playbooks, citing difficulties in re-underwriting assets measured in compute and megawatts. CWCapital is developing new stress tests, while Axonic keeps data center exposure small and emphasizes diversification. Most deals are single-asset, single-borrower (SASB) transactions tied to one facility.

Lease terms around power costs, capacity commitments, and downtime are critical but often opaque due to tenant confidentiality. As Ben Hunsaker of Beach Point Capital Management notes, traditional CRE investors lack standardized tools for these assets. Location now prioritizes access to cheap electricity and transmission over proximity to urban cores, with tenant rollover risk heightened by specialized infrastructure that may not accommodate other users.