What is a data centre, anyway? An agent’s guide to the infrastructure

Artificial intelligence and cloud computing are driving rapid growth in demand for data centres, and municipalities across Ontario are beginning to evaluate where these facilities should be built and how they fit into their long-term planning strategies.

As a result, real estate professionals may increasingly encounter data centres through industrial land transactions, redevelopment opportunities, planning discussions, infrastructure investments or questions from buyers, sellers, investors and developers about proposed projects in their communities.

Unlike most real estate developments, data centres are shaped by engineering requirements such as electrical capacity, fibre connectivity, water resources, transportation access and operational reliability. Understanding what a data centre is, how it works and why it is engineered differently from most other buildings helps real estate professionals interpret these projects more effectively.

Having attended public meetings where data centres were discussed, one observation stood out. Despite detailed technical presentations, a gap often remained between the information presented and the public’s understanding of how these facilities actually operate. This can make meaningful discussion more difficult for everyone involved.

Regardless of whether someone supports or opposes a particular project, informed discussion begins with a common understanding of what a data centre is, how its major elements work together and how the engineering decisions inside these facilities can influence infrastructure, resource demands and community planning.

There’s a very strong chance that today you’ve sent a text message, transferred money, streamed music, searched the web and/or interacted with an artificial intelligence assistant such as ChatGPT, Claude or Gemini. Each of these actions feels almost instantaneous, yet each depends on computers somewhere in the world performing work on your behalf.

Those computers are housed in data centres, the physical infrastructure behind the digital services we depend on every day. Whether we realize it or not, all of us rely on these facilities.

Before discussing where data centres should be built, it helps to understand what they consist of and how their major elements work together. Although data centres vary considerably in size, purpose and complexity, they can be understood through three broad elements:

1. The land and building, including building services
2. The information technology equipment
3. The power and cooling infrastructure

Thinking about a data centre in terms of these three elements helps explain why planning, engineering, utility and real estate decisions are closely interconnected.

Figure 1 shows the main elements of a data centre : Concept developed by the author. Illustration generated using artificial intelligence and reviewed by the author.

The land and building

The land and building provide far more than a place to house servers. Together, they create the secure, resilient and controlled environment required for a data centre to operate reliably around the clock.

Location, location, location

Selecting the right location is a critical engineering and development decision. For real estate professionals, the process involves far more than identifying a property with appropriate zoning.

Developers need to evaluate factors such as flood risk, seismic activity, proximity to electrical substations, the availability of redundant utility feeds, fibre connectivity and many other factors that affect the long-term reliability of the facility. They must also consider nearby hazards that could threaten the reliability of the facility, including airports, railway corridors, hazardous industrial operations and other external risks.

The building itself is engineered around the operational requirements of the data centre. It must provide multiple layers of physical security, controlled access, fire protection, structural resilience and a clean, environmentally controlled space for the information technology equipment.

Almost every aspect of the facility is designed around one overriding objective: maintaining continuous operation.

Why this matters

These requirements help explain why two seemingly similar industrial properties can have very different potential for data centre development.

The information technology equipment

The information technology equipment is the heart of the data centre and the primary driver behind the industry’s rapid growth. It includes computing, storage and networking equipment.

In artificial intelligence data centres, computing increasingly relies on specialized processors such as graphics processing units, commonly known as GPUs. These processors are designed to perform the large number of parallel calculations required by modern artificial intelligence models.

In many ways, designing a data centre is similar to designing a home or office building. When architects and engineers design spaces for people, they consider the occupants’ needs, including temperature, fresh air, lighting, safety, security and reliable utilities.

A data centre follows the same general principle, except its primary occupants are information technology equipment rather than people. The building, electrical systems, cooling systems, fire protection, security and monitoring systems are all designed around the operational requirements of that equipment.

If the information technology equipment changes, the supporting infrastructure often has to change with it.

Artificial intelligence is accelerating this process. New generations of artificial intelligence hardware can perform far more computational work than traditional servers, but they also require substantially more electrical power and generate significantly more heat. As the equipment becomes more powerful, the electrical and cooling systems supporting it must evolve as well.

Why this matters

As computing equipment evolves, developers may require larger buildings, greater electrical capacity, more advanced cooling systems and different supporting infrastructure. These changing technical requirements can influence site selection, property suitability and future redevelopment opportunities.

Power and cooling

The third element is what the industry commonly refers to as power and cooling. Together, these systems form the critical infrastructure that allows the information technology equipment to operate continuously, often 24 hours a day, 365 days a year.

Power

Supplying power to a data centre involves much more than bringing electricity into the building. A modern facility typically includes multiple electrical systems responsible for receiving, conditioning, distributing and backing up power.

These systems are designed to provide reliable, resilient and often redundant electricity to the information technology equipment, cooling systems and other building services.

Canada is well positioned compared with many other countries in terms of low-carbon electricity generation. The electricity mix varies by province. Ontario relies primarily on nuclear and hydroelectric generation, while Quebec and British Columbia rely heavily on hydroelectricity. Other provinces use a more varied mix that may include natural gas, coal, wind, solar, hydroelectricity or imported electricity.

A relatively low-carbon electricity grid, however, does not mean that electrical capacity is unlimited.

One of the key questions for any proposed data centre is whether sufficient capacity exists to serve the facility without compromising the reliability of the wider electricity system. This is not simply a question of how much electricity is generated. It also depends on whether sufficient generation, transmission and local distribution capacity are available at the proposed location, or whether major upgrades will be required.

Electricity demand is also growing because of population growth, manufacturing, building and transportation electrification and artificial intelligence infrastructure. Expanding generation, transmission and distribution capacity will therefore become an increasingly important part of the discussion.

Why this matters 

Access to reliable electrical infrastructure is often one of the first issues considered during site selection. A property may have suitable zoning and sufficient land, but still be unsuitable if the required electrical capacity cannot be delivered within an acceptable cost or timeframe.

Cooling

Cooling is equally critical. Much of the electrical energy consumed by information technology equipment ultimately becomes heat.

If that heat is not continuously removed, the equipment may reduce its performance or shut down to protect itself. Maintaining the proper operating temperature is therefore not a matter of comfort. It is fundamental to the reliable operation of the data centre.

Power and cooling are inseparable. Increasing the amount or power density of the information technology equipment increases electrical demand, which in turn increases the amount of heat that must be removed. One system cannot be designed without considering the other.

Water is an effective and widely used heat-transfer medium in industrial and mechanical systems. Its thermal properties allow it to absorb and transport large amounts of heat, making it useful in certain data centre cooling systems.

For this reason, discussions about data centres often focus on water consumption and the potential effects on local water resources. Where cooling water or system blowdown is discharged, discussions may also need to consider water quality and the capacity of local wastewater infrastructure.

Several cooling technologies are used in data centres, each with different water, energy, space and operational requirements.

Evaporative cooling systems consume water through evaporation and require periodic blowdown to control water quality. Air-cooled systems largely eliminate ongoing cooling water consumption, although they may require larger equipment, consume more fan power and generate more noise. Hybrid systems combine aspects of both approaches, allowing operators to balance water use, energy efficiency, climate conditions and operational requirements.

These are only some of the cooling approaches used in modern data centres. Engineers continue to develop technologies that improve energy efficiency, reduce water consumption, recover waste heat and respond to local environmental conditions. A detailed discussion of these technologies is beyond the scope of this introductory article.

Water availability is often discussed in national terms, but the more important question is whether sufficient water is available at the proposed location and whether local infrastructure can support the demand.

Why this matters

Cooling technology can influence municipal servicing requirements, environmental reviews, building design, noise considerations and community discussions about water use.

Data centres are no longer simply a technology issue. They are becoming an important part of discussions about infrastructure, planning, economic development and real estate. Those discussions are strongest when they begin with understanding rather than assumptions.

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