Data Center Land Lease Rates: What Landowners Actually Get Paid

How data center ground rent is priced

Ground rent is usually quoted per acre per year, and a single tract can carry different rates for different uses. The best-documented recent example is a ground lease in Potter County, Texas, disclosed in an SEC Form 8-K: base rent of $6,000 per acre per year on a 200–800 acre data center area and $1,000 per acre per year on a solar area of at least 1,800 acres, around an existing 345 kV substation.

Some leases skip per-acre pricing entirely. The City of Denton, Texas lease, for example, pays roughly $53,950 per month with CPI-U adjustments every two years.

When rent actually starts

This is the clause landowners most often overlook. In the Potter County lease, rent on each area begins only when construction starts there, and the lease itself does not commence until conditions are met, including utility commitments for at least 200 MW of firm service, water commitments, an interconnection agreement and government approvals. The tenant has a one-year inspection period, extendable by a year, and can walk away before it ends.

In other words, a headline per-acre rate can sit unpaid for years. Ask what you are paid during the pre-construction period, and what happens if construction never starts. That lease, for instance, lets the landlord terminate as to an area if construction has not started within 48 months.

Escalators, revenue share and purchase options

Escalation is typically a fixed percentage, CPI-linked, or both. The Potter County lease uses annual CPI escalation and also gives the landlord 0.5% of data center revenue until the tenant buys the site. A Texas Tech University System lease in Carson County runs 99 years, with rent rising for five years and then 3% a year.

Many leases include a tenant purchase option. In Potter County the tenant can buy the data center area at $100,000 per acre before on-site generation begins commercial operation, or $135,000 per acre after. If you sign a lease with a purchase option, you are effectively pre-negotiating your sale price today.

What drives a higher rate for your land

The factors that push rent up are the same ones that drive sale value: proven grid capacity (a utility will-serve or capacity confirmation beats “near a line”), distance to a transmission substation, acreage and expansion room, water, fiber, and zoning that permits the use. Parcels that can demonstrate these move up the negotiating ladder fastest.

Frequently Asked Questions