Central Iowa is increasingly a strong fit for tech companies because of the state’s abundant land, low energy costs and available infrastructure, data center experts said at a recent commercial real estate event.

CREW Iowa, a networking group for women in real estate, hosted a data center panel on June 10 at Wesley on Grand. Panelists included: Jackie Nickolaus, land development and permitting program manager at Microsoft; Jennifer Moseley, data center engineer at Turner Construction; Jennifer Brown, economic development director at the city of Waukee; and Raelyn Wharton, associate director of private markets product development at Principal Asset Management on the panel.

The data center sector is growing in the state. A Business Record analysis of data center properties showed that there are nine data center properties in Central Iowa, in the counties of Polk, Dallas, Madison and Warren. Those properties increased in value by 5.1% from 2024 to 2025, to $3.57 billion. Meta has a data center property in Altoona, Apple has one in Waukee and Microsoft has 16 data centers on its properties, including five active centers and two planned but not constructed.

“Worldwide, Microsoft has 300 data centers and 16 of them are in Des Moines; that’s a pretty good concentration,” Nickolaus said.

Site selection
There is high demand for data centers on the coasts and in highly populated areas, but Iowa has more access to plenty of land, energy and fiber connections.

“Sites are selected for a variety of reasons. It’s a compromise between where your demand is – of course, there is more demand on the coasts – and where the reliable energy and other resources are – Iowa, which also has relatively less expensive land and ease of regulation. It’s all about where you can site them and still have a tolerance for latency, that little bit of a blip you get when you ask [the computer] for information and don’t get it,” Nickolaus said. “Different groups of people have different requirements for latency. Gamers don’t like latency, they expect results right now. Some companies are trying to site those data centers closer to where those gamers are concentrated, versus some other industries where a half second blip wouldn’t be as much of a concern.”

The corporations that run data centers often follow strict conservation policies and demand the same of their facilities. Iowa’s wind energy portfolio has been a strong attractor for data center tenants. Microsoft, for example, plans to be carbon negative, water positive and zero waste by 2030.

“That means we’re shifting data center designs to meet those goals,” Nickolaus said.

Workforce availability is also an issue, as data centers require 800-1,200 workers daily during construction of the buildings. Microsoft employs more than 500 data center employees in Iowa; that number is expected to increase to more than 750 by next year.

Community selection
Apple built a $1.3 billion data center in Waukee, which became operational last year. To secure the development deal, the city of Waukee leveraged its energy resources, available land, workforce availability, tax incentives and development planning capabilities, Brown said. Construction of the facilities is not just a one-off, but a repeated, compounding economic development project and infrastructure investment for the area, she said.

“[Benefits include] millions of dollars and potentially billions in new tax valuation for these facilities, which really paid for critical city infrastructure,” Brown said. “It brings new people to the community, brings in the workforce. Tax revenues are so important to us in our communities.”

More than $177 million was spent on new infrastructure leading to the site, she said, and the city recently completed a new public safety facility with space for police and fire. The development deal with Apple included a $100 million public improvement fund investment from the company that the city is using to build parks, infrastructure and public art projects.

For its conservation practices, Apple’s Waukee property incorporates a closed-loop water system, which uses a fraction of the water compared to initial estimates, and the company is creating a wetlands area.

Power needs
About 20% of the revenues for Turner Construction come from data center construction. The global company constructs enterprise, co-location, edge, cloud-based and hyperscale data centers. Construction turnaround for data centers is about two years, although Turner recently built a small data center in three months. Energy efficiency and redundancy are top priorities when planning site infrastructure, Moseley said.

“There is a lot of redundancy in data centers that we maintain, especially the equipment as we go from facility to facility,” she said. “We have to be careful about making sure everything goes through and we have redundancy in energy needs.”

Iowa is also an attractive destination for data centers because of its low rate of natural disasters.

“Tornadoes are the biggest concern that we have,” she said.

MidAmerican Energy rates are 42% below the national average and the company’s investment in renewables makes Iowa attractive for data centers, Brown said.

“A 1 cent kilowatt hour variance on a 100 megawatt data center translates to $876,000 a year. So even if it goes up by 1 cent, that’s a lot of cost involved,” she said. “It’s very critical for our partners when the city comes in and we’re having a conversation about putting together a development agreement, it’s important to have those conversations that have some type of incentive related to working with our power and working with utilities.”

Growing investor market
Principal Asset Management manages eight investment strategies with data center exposure. Three of those strategies are 100% allocated to data centers. Within those three strategies, Principal has raised about $4.5 billion in capital from investors, Wharton said. Investors in data centers are wide ranging, including public pensions, foreign pensions, endowments, foundations, health care, insurance and more.

Wharton said at Principal’s annual Real Estate Investor Conference in May, data centers were the trending discussion, and funding reporting and other statistics illustrate increased interest in the sector.

Data center investors’ top concerns include availability of power to fuel the centers, and supply chain disruptions. There could be a multi-year wait to connect data centers to a power grid, Wharton said.

“Sometimes power [connection] in certain markets could be out three to five years or even more,” she said. “Having the ability to put on-site substations is really critical there, [as is] working with operators and developers that have relationships with utility companies, understanding the lead time to get power through to the facility is really important.”

Supply chain disruptions are another top concern in the data center sector. For one, some of the specialized equipment used in data centers is produced in China. Tariffs and low availability of parts can be problematic and construction material delays are also typical.

“Being able to put in enhanced purchasing programs to get that equipment purchased ahead of time can really help, so it’s not delaying your construction schedule,” she said.

Tariffs are also coming up as a concern.

“From our perspective, we definitely do think that development costs will increase because of [tariffs and supply chain disruptions], but we believe those costs will get pushed down to the tenants through rent,” she said. “Experienced contractors are going to account for this in their budgets, so you’ll see higher material costs and larger contingency budgets.”

Data center 101
From the outside, data centers look similar to warehouses or distribution centers stretching across hundreds of acres. Microsoft has more than 1,100 acres of land split between West Des Moines and Van Meter, while Apple has 2,000 acres in Waukee and Meta’s Altoona site is 520 acres. Data centers house many important facets of daily life, including photos, videos and gaming data, as well as sensitive information for banking, health care and other industries.

“Data centers enable innovation and productivity, so data centers are an investment in critical digital infrastructure. All kinds of businesses are driving our need for data centers,” Nickolaus said.

These facilities have high-level electrical, mechanical and security requirements and are so secured that many of the employees of the companies operating them are not allowed to enter.

“I was actually able to get into my first operating data center two months ago and I have coworkers who have never, ever been in one, even in a data center under construction, because getting in is not easy,” she said. “That’s why we’re sitting here today and not at the data center [on a tour].”