79% of Global Data Center Capacity Faces Elevated Climate Risk, First Street Finds

Seventy-nine percent of global data center capacity sits in locations carrying elevated exposure to at least one climate hazard, according to research published by First Street on June 18. The analysis covers the world's largest and fastest-growing data center markets, finding them concentrated in areas exposed to flooding, extreme heat, wildfire, wind, and drought.

Elevated Exposure Is the Norm, Not the Tail

The 79% figure frames elevated climate exposure as the baseline condition for this asset class rather than an exceptional one. First Street identified five distinct hazard categories bearing on where global capacity is sited — flooding, extreme heat, wildfire, wind, and drought — spanning both acute physical damage risk and chronic operational stress.

Capacity Growth Is Not Dispersing Risk

The research distinguishes between the world's largest existing markets and the fastest-growing ones, finding both sets concentrated in high-hazard locations. For the buy-side, the implication is that new capital flowing into data center construction is not naturally migrating toward lower-risk geographies — climate exposure and capacity growth appear to be running in the same direction.

The five hazards carry different operational consequences. Flooding, wildfire, and wind threaten physical assets and continuity of operations. Extreme heat and drought impose chronic stress, affecting cooling infrastructure, water availability, and the energy costs embedded in long-duration infrastructure valuations.

First Street's findings position data center climate risk as geographically structural rather than idiosyncratic to individual sites. Investors with exposure to data center infrastructure now have a quantified starting point for siting-risk assessment: by this measure, nearly four out of every five units of capacity operates in elevated-hazard territory.

Related reading

• Fed Signals Rate Rise as Warsh Takes Helm, Bond Markets Sell Off