Data centres: the good, the bad and the ugly

Summary provided by officers
IBA Corporate and M&A Law Committee

A session at the IBA Annual Conference Toronto 2025, on 3 November 2025

Real Estate Section (Lead)
Corporate and M&A Law Committee
Tax Committee

Session Co-Chairs
Maria Flavia Candido Seabra, Machado Meyer Advogados, São Paulo
Adina Shapiro, Meitar Law Offices, Ramat Gan

Panelists
Maximilien De Ridder, Lenz & Staehelin, Geneva
David Eliakim, King & Wood Mallesons, Sydney
Travis McCready, JLL, Boston
Marc Mondesir, Equinix, Toronto
Susanne Schreiber, Bär & Karrer, Zürich
Sushant Shetty, Fox Mandal & Associates, Mumbai

Session summary

Roughly 50 per cent of the world’s data has been generated in only the last three years -- and less than six per cent of the data created this year will be kept in data storage. Add to that the 21 per cent compound annual growth rate (CAGR) increase in internet traffic and the surge in data consumption – especially on mobile devices – and it becomes clear why the demand for new data centres is skyrocketing. But building them is no simple task: for example, the power consumption of a 40 MW data centre is equivalent to that of a city made up of 33,000 homes and/or a population of 86,000 people.

We had the opportunity to dive into research and findings such as these during the session ‘Data centers: the good, the bad and the ugly', organised by the Real Estate Section, the Corporate and M&A Law Committee and the Taxes Committee, co-chaired by Adina Shapiro and Maria Flavia Candido Seabra, together with a multidisciplinary panel: Marc Mondesir, Travis McCready, Sushant Shetty, Susane Schreiber and David Eliakim.

The discussion expanded on the explosive growth of global data generation outlined at the outset, examining how rising artificial intelligence (AI) workloads, hyperscaler expansion and power scarcity are reshaping the fundamentals of site selection, permitting, energy strategy and infrastructure planning. As one speaker noted, 'our entire way of life relies on digital infrastructure -- and at the heart of it are data centres and the electricity that powers them,' underscoring their evolution into a distinct and complex asset class.

From there, the panel explored how these real estate and technical constraints flow into M&A, financing, tax and cross-border structuring. The conversation highlighted the increasing reliance on innovative financing models, forward sale agreements and platform-level investments, alongside growing regulatory fragmentation across jurisdictions. Issues such as data localisation, foreign direct investment (FDI) review, export control regimes and the classification of data centres as critical infrastructure now play a direct role in valuation, feasibility and due diligence processes. Several panelists emphasised the unprecedented pace of change within the sector, aptly summarised by the remark that 'the sector is moving so fast there are more questions to pose than answers.' Looking ahead, the panel agreed that the coming few years will be defined by intensifying competition for power resources, regulatory realignment, sovereign AI requirements and rapid shifts in technical specifications, making early, integrated planning across legal, regulatory, commercial and technical dimensions essential.

Key takeaways

• power is the defining constraint: both a technical and political issue affecting siting, approvals and cost structures;
• data centres behave like critical infrastructure, requiring multidisciplinary due diligence across real estate, regulatory, cybersecurity and environment, social and governance (ESG) domains;
• deal structures are evolving, with joint venture (JV) models, real estate investment trust (REIT) partnerships, forward sale agreements and platform-level investments dominating growth strategies;
• geopolitics now directly shapes feasibility, including export control rules, national security reviews and localisation mandates;
• future formats are emerging, namely underwater cooling, off-coast power integration, distributed micro-data centres and even space-based compute nodes;
• regulatory fragmentation is accelerating, making early and continuous regulatory engagement essential; and
• the three to five year horizon will involve market defining shifts, driven by enabling technologies, AI power density and new computer architectures.