Principal Asset Management Closes $3.6B Data Center Development Fund

Data center development is booming and continues to attract investor capital. 

Principal Asset Management announced Friday that it closed a $3.64 billion fund exclusively devoted to developing hyperscale data centers across the United States. This is the third discretionary data center-focused fund closed by Principal in recent years. 

The new fund — known as Principal Data Center Growth & Income Fund — is expected to partner with Stream Data Centers and capitalize up to $8 billion of data center development. 

John Berg, senior managing director and global head of private real estate at Principal Asset Management, said in a statement that the new fund is responding to “the surging demand for digital infrastructure.”

“The success of this fundraise affirms our deep expertise in data center investments,” Berg said. “This strategy aligns with our focus on investing in scalable sectors of the market that we expect to benefit from secular tailwinds and continues our expansion into opportunistic real estate strategies.”

Data centers are among the most well-capitalized assets in all of commercial real estate. 

Between 2024 and 2028, global investment in new data center capacity will reach $2.2 trillion, or average $443 billion annually, according to Moody’s Ratings. 

JLL Capital Markets research found that the U.S. co-location data center market has doubled in just the last four years, with occupancy increasing at a 30 percent clip annually since 2020.

Principal Asset Management serves as the investment arm of Principal Financial Group, which has $559 billion assets under management. 

Brian Pascus can be reached at bpascus@commercialobserver.com