Data Center Due Diligence
What to Verify Before You Buy, Finance or Lease a Data Center, and What Usually Goes Wrong
Most data center deals fail on things the offering memorandum called settled: power promised but not contracted, a building tenants cannot use, a lease that reads better than it pays. We run independent diligence at a fixed fee, with no stake in the outcome.
Scope a Diligence ReviewData center due diligence is the independent verification an investor, lender or acquirer does before committing capital to a data center: whether the power is contracted or merely promised, whether the building can serve the tenants the business plan assumes, whether the leases pay what the rent roll says, and whether the market will still want the facility in five years. It is the core of our data center consulting practice, and it differs from ordinary real estate diligence in one way that decides most deals: the value of a data center is set by power and density, not by square footage, and those two things are the easiest to overstate in an offering memorandum.
Sources: CBRE US Real Estate Outlook 2026; Wood Mackenzie, via Data Center Knowledge; Digital Realty. Transformer weeks converted to months (MCA calculation). Figures checked September 2026. Free to cite with a link to this page.
The site or facility, the stage of the deal, and what the seller has provided. You'll hear back within 24 hours with a scoped review: what we would verify, what it costs, and how long it takes. Engagements are fixed fee and paid by you; we have no stake in whether the deal closes.
The Seven Areas of Data Center Due Diligence
A complete review covers seven areas. The first two decide most deals; the last two are where surprises hide after closing.
| Area | The question | What "verified" means |
|---|---|---|
| 1. Power | How much is contracted, energized and deliverable, and by when? | A utility agreement with capacity, dates and cost; transformer and switchgear orders with delivery dates; the difference between utility capacity and usable IT load shown in the numbers |
| 2. Building and density | Which tenants can this building physically serve? | Floor loading in pounds per square foot from the structural drawings, clear height, cooling design and how far the loop reaches, generator and UPS topology stated as what it is, not as a tier claim |
| 3. Tenants and leases | Does the rent roll pay what it says, for how long, on what terms? | Every lease read for escalators, power basis, renewal mechanics, expansion rights and termination; tenant credit and concentration; what happens at each expiry |
| 4. Market and demand | Who leases this kind of capacity in this market, at what rate, against what supply? | Vacancy, absorption and preleasing for the market; the competing projects with contracted power; the rate the model assumes tested against current quotes |
| 5. Entitlement and community | Is the use permitted, and will it stay permitted? | Zoning as written for the parcel, whether a municipality or county is separately in control, any moratorium or pending ordinance, and the noise, water and traffic conditions that trigger opposition |
| 6. Connectivity | Which carriers are on the site, and what does it cost to reach the ones that are not? | Fiber on the poles or in the ground, diverse entries, the meet-me room, and the cost of a circuit to the nearest interconnection hub |
| 7. Operations and certifications | Is the facility run to the standard the marketing claims? | Certifications checked against the issuing registry, not the brochure; maintenance and incident records; staffing; PUE measured, not designed |
What each of these costs to get wrong is on the data center cost page; how the lease terms in area three carry the money is in the data center lease guide; and how to read a tier claim is in data center tiers.
Power: The Question That Decides Most Deals
Every offering memorandum has a power number. The diligence question is what stands behind it. In our work the same three tiers keep appearing, and the difference between them is the difference between a marketable building and a plan.
Contracted and energized
A signed utility agreement, transformers installed, capacity available today. This is the only power a tenant, lender or appraiser fully underwrites.
Available but not contracted
The utility has said the capacity exists, often at a nearby substation, but nothing is signed and no equipment is ordered. It is real, and it is worth pursuing, but it is not an asset until it is papered.
Being sought
A study is underway, or planned. Utility studies now run one to two years, and the transformer at the end of them more than three; the data center cost page tracks the current lead times. This power belongs in a later phase of the model, not in the headline.
Two more checks that catch more than they should. Utility capacity is not IT load: after transformer losses, power distribution and cooling, a 7.5 MVA service supports roughly 5 MW of IT load at a typical PUE, and a plan written against the utility figure overstates leasable capacity by a third. Rated versus deliverable: a "24 MW campus" may have 4 MW energized and 20 MW in the queue; the phasing matters more than the total.
The Building: Who Can It Actually Serve?
A data center's tenant market is largely fixed before construction starts, by three specifications that rarely appear in the marketing.
| Specification | What it decides | Where to find it |
|---|---|---|
| Floor loading | Whether rack-scale AI is possible at all. A fully populated rack-scale cabinet runs around 1,400 kg; many industrial slabs are specified well below what a hall of them requires | The structural sheets (general notes), in pounds per square foot. A concrete compressive strength in PSI is not the same number |
| Cooling design and reach | The density ceiling: air with containment to about 35 kW per rack, rear-door exchangers to about 70 kW, direct-to-chip for rack-scale systems. Whether a chilled water plant exists decides whether liquid cooling is a fit-out or a rebuild | The mechanical drawings and the site plan; the water temperature and flow the plant can deliver at the rack |
| Electrical topology | What redundancy the building really has, and therefore which tier claims survive a tenant's questions | The one-line diagram, read against what the marketing says. "Tier 3 design" and "Tier III certified" are different claims; data center tiers explains the difference and the provider comparison covers how the major operators approach certification |
Tenants, Leases and the Rent Roll
The rent roll is a summary. The leases are the asset. Read every one for the terms that move the money over the remaining term; the data center lease guide covers each clause from the tenant's side, which is the side a buyer inherits.
Escalators and power basis
Fixed, CPI-linked or capped; billed on connected, committed or metered power. Two leases with the same rate can differ by a fifth in value over ten years.
Renewal and expansion rights
Renewal at then-current rates favors the owner; capped renewals do not. Expansion rights promised to tenants can quietly commit capacity the model counts as available.
Expiry and concentration
When each lease ends, what the market rate is likely to be then, and how much revenue sits with one or two tenants.
Delivery obligations
Dates and remedies the owner owes tenants for space not yet built. Missed dates carry abatement or termination rights that a buyer inherits.
Tenant credit
Who stands behind the lease, especially where the tenant is a newer AI or GPU operator; operators now ask this before price, and so should a buyer.
Service and SLA exposure
What the owner has promised on availability and remote hands, and what it has paid out in credits.
Market, Entitlement and the Rest
Market and demand
Vacancy in primary markets sits at 1.4 percent and 80 percent of construction is preleased (CBRE, H1 2026), but that is an average. The check is the specific market: who is building with contracted power, what they are quoting, and whether the rate in the model is a rate anyone is signing. Our market guides for Northern Virginia, Dallas, Atlanta, Chicago and the New York metro carry the current numbers, and wholesale colocation the rate structure.
Entitlement and community
Zoning read as written for the parcel, whether a city or a county controls it, and whether a moratorium or ordinance is pending. In 2026 the Data Center Watch count of blocked and delayed projects is a reminder that permission is a live risk, not a formality. The site selection guide covers what to check before a parcel is under contract.
Connectivity
The carriers physically on the site, diverse entries, and the cost of reaching an interconnection hub if the site has few. Thin fiber is fixable; the question is who pays and how long it takes. See data center connectivity.
Operations
Certifications checked at the issuing body, maintenance records, incidents, staffing and measured PUE. A facility's history is in its logs, not its brochure.
Ten Red Flags We See Repeatedly
"Power available" with no signed utility agreement
The most common and most expensive. Until it is contracted with dates, it is a hope.
Utility capacity presented as IT capacity
Overstates leasable load by roughly a third.
A cabinet count the power cannot serve
The hall is full on paper and empty in the market.
Floor loading given in PSI
Concrete strength is not load capacity. Ask for pounds per square foot from the structural set.
"Tier 3" without a certificate
A design intent is not a certification. Check the Uptime Institute registry.
A rent roll that does not match the leases
Escalators, free rent and expansion rights read differently from the summary.
Renewals at market with no reference
Where "market" is undefined, the number in the model is a guess.
A transformer date nobody can produce
If the order confirmation does not exist, neither does the delivery date.
Zoning confirmed by the seller, not the code
Read the ordinance and confirm which body controls the parcel.
Two carriers on the poles
Fine for a warehouse; thin for a data center. Price the fix before closing.
The Data Center Due Diligence Checklist: What to Request From the Seller
Diligence moves at the speed of the document request. This is the list we send on day one, grouped by the seven areas; the items in bold are the ones most often missing, and their absence is itself a finding.
| Area | Documents to request |
|---|---|
| Power | Executed utility service agreement with capacity, phasing dates and cost; will-serve or capacity letters; transformer and switchgear purchase orders with confirmed delivery dates; the one-line diagram; generator and UPS specifications, ages and test records; fuel contracts; the last twelve months of utility bills |
| Building and density | Structural drawings with floor loading in pounds per square foot; mechanical drawings and the cooling plant specification (chilled water temperature and flow at the rack); the fire suppression design; roof and envelope condition reports; the as-built set, not the permit set |
| Tenants and leases | Every executed lease and amendment, not the abstract; the rent roll with power basis per tenant; tenant estoppels; expansion and right-of-first-refusal schedules; delivery obligations outstanding; SLA credit history; tenant financials or credit ratings |
| Market and demand | The seller's market study and the assumptions behind the model's rates; the pipeline of competing projects with contracted power; current quotes for comparable capacity in the market |
| Entitlement and community | Zoning confirmation from the code, not a letter; permits issued and pending; any moratorium, pending ordinance or conditional-use condition; water and noise permits; tax abatement or incentive agreements and their clawbacks |
| Connectivity | Carrier list with contracts; fiber entry drawings showing diverse paths; meet-me room design; dark fiber or metro circuit pricing to the nearest interconnection hub |
| Operations and certifications | Certificates from the issuing bodies (Uptime, SOC 2, ISO, PCI) for this building; maintenance logs; incident and outage history; staffing and vendor contracts; measured PUE by month; insurance and environmental reports |
Who Hires Us for Due Diligence
Acquirers
Funds and operators buying an operating or partly built facility, who need the offering memorandum tested by someone who did not write it and does not stand to earn a fee if the deal closes.
Lenders and credit committees
Construction and acquisition lenders who need the power, timeline and rent assumptions verified in a form a committee can read, with the risks ranked.
Investors and limited partners
A second opinion on a sponsor's plan: whether the capacity, the tenants and the market are what the deck says, delivered before the capital call, not after.
Developers and landowners
Owners of a site or a powered shell who want to know what it can actually serve, what it is worth to which tenants, and what to change before construction. See build to suit and powered shell.
What you get
A written report against the seven areas, with every assumption in the model marked verified, unverified or contradicted, the documents that support each finding, the open items ranked by what they would cost to be wrong, and a call to walk through it. If the deal is sound, the report says so.
How we work alongside your engineers and lawyers
We are not a replacement for a structural or MEP engineer's inspection or for counsel's lease review. We frame the questions they should answer, read their findings against the business plan, and cover the commercial and market questions neither of them is asked.
How Diligence Engagements Work
We run diligence as a fixed-fee consulting engagement, paid by you, scoped to the deal. We design nothing and operate nothing, and we take no fee from any operator or tenant on a diligence assignment, which is why the findings are independent. Published consulting engagements run from $50,000 to $195,000 depending on scope; a focused review of one facility sits at the lower end, a full feasibility and market study higher. Everything is delivered in writing, with a call to walk through the findings.
Acquisition diligence
An operating or partly built facility: power, building, leases, market, entitlement, operations. Delivered as a written report with the model's assumptions tested line by line.
Development and feasibility
A site or a planned building: what the power supports, which tenants the specification can serve, what the market will pay, and what to change before construction. The kind of work covered in data center consulting.
Lender and investor review
A second opinion on someone else's plan: whether the capacity, timeline and rent assumptions hold, and where the risk sits. Scoped to the questions your committee will ask.
Independent placement is a separate practice: when a company needs capacity rather than a building, we place it with the operator that fits and the operator pays us. The two are never mixed on the same engagement. How it works.
Frequently Asked Questions
What is data center due diligence?
The independent verification an investor, lender or acquirer does before committing capital to a data center: whether the power is contracted and deliverable, whether the building can serve the tenants the plan assumes, whether the leases pay what the rent roll says, whether the market supports the assumed rates, whether the use is and will stay permitted, and whether the facility is operated to the standard claimed.
What does a data center due diligence checklist include?
Seven areas: power (contracted capacity, dates, equipment orders), building and density (floor loading, cooling design, electrical topology), tenants and leases (escalators, power basis, renewals, expansion rights, credit), market and demand (vacancy, competing projects, achievable rates), entitlement and community (zoning, moratoriums, opposition), connectivity (carriers on site, diverse entries) and operations (certifications checked at source, maintenance and incident records, measured PUE).
What is the biggest risk in buying a data center?
Power that is described as available but is not contracted. New utility interconnections for large campuses now take 24 to 48 months or more, and transformers more than three years, so power that is not papered with dates cannot be underwritten. The second biggest is a building specification that cannot serve the tenants the business plan assumes.
How is data center diligence different from commercial real estate diligence?
Value is set by power and density, not square footage. A 100,000 square foot building with 5 MW of contracted power is worth more than a 200,000 square foot building with 2 MW, and the tenant market is decided by floor loading, cooling and electrical design rather than location and finish. Standard property diligence rarely tests any of those.
What should a lender verify before financing a data center?
That the power is contracted with delivery dates and equipment on order; that the capacity in the model is IT load, not utility capacity; that the leases and their escalators, renewals and expansion rights match the rent roll; that the assumed rates are being signed in that market now; and that zoning and any pending local ordinance allow the use.
How much does data center due diligence cost?
We run it as a fixed-fee consulting engagement, paid by the client, with published engagements running from $50,000 to $195,000 depending on scope. A focused review of one facility sits at the lower end; a full feasibility and market study higher. Findings are delivered in writing.
How long does data center due diligence take?
It depends on what the seller provides and how fast the utility and the municipality answer. A focused facility review can be delivered in weeks; verifying uncontracted power or a pending zoning matter can take longer, because the answer is outside anyone's control. We say up front what can be verified on the deal's timeline and what cannot.
Can Metro Colo Advisory run diligence if it also places tenants?
Yes, and the two are kept separate. Diligence is a fixed-fee engagement paid by the client, with no fee from any operator or tenant on that assignment. Placement is a separate practice where the operator pays. We do not do both on the same deal.
What documents should I request from a data center seller?
The executed utility service agreement with capacity and dates, transformer and switchgear purchase orders with delivery confirmations, the one-line diagram, structural drawings with floor loading in pounds per square foot, the mechanical and cooling plant specifications, every executed lease and amendment with the rent roll and tenant estoppels, zoning confirmation from the code plus any pending ordinance or moratorium, the carrier list and fiber entry drawings, certificates from the issuing bodies, maintenance and incident logs, and measured PUE by month.
How do you verify a data center's power capacity?
By reading the utility service agreement for contracted capacity, phasing and dates; confirming equipment orders with delivery dates for transformers and switchgear; walking the one-line diagram to see what is installed and energized; and converting utility capacity to IT load, since after losses, distribution and cooling a 7.5 MVA service supports roughly 5 MW of IT load at a typical PUE. Power that is described but not papered goes in a later phase of the model.
What is the difference between technical and commercial data center due diligence?
Technical diligence tests the physical asset: power, cooling, structure, electrical topology and operations, usually with an engineer's inspection. Commercial diligence tests the business plan: the leases, the tenants, the market rates, the entitlement and the timeline. Most data center deals fail on the second kind, because the numbers in the model were never checked against what is signed, and it is the part standard property diligence skips.
Do I still need an engineering firm and a lawyer?
Yes for a physical inspection and a legal lease review. We frame the questions they should answer, read their findings against the business plan, and cover the commercial and market questions neither is asked: whether the capacity is leasable to the tenants assumed, whether the rates are being signed in that market, and whether the timeline survives the utility and the municipality involved.
What is a data center feasibility study?
Diligence on a site or a plan rather than an operating building: what the available power supports, which tenants the specification can serve, what the market will pay, how long the utility and permitting will take, and what to change before construction. It is the development version of the same seven-area review, and it is where our data center consulting practice began.
Scope a Diligence Review
Tell us the site or facility, where the deal stands, and what the seller has provided. You'll hear back within 24 hours with a scoped review: what we would verify, what it costs, and how long it takes given the utility and the municipality involved. If the deal is sound, the report says so; that is what it is for.
No stake in whether the deal closes, and no fee from any operator or tenant on the assignment.
The consulting practice: data center valuation, data center financing, data center consulting, build to suit, powered shell and site selection.
The numbers: data center cost, the colocation pricing guide, wholesale colocation and the data center lease guide.
The technical checks: which providers are tier certified, data center tiers, direct to chip cooling, AI and GPU colocation and data center connectivity.
