79% of Global Data Center Capacity Faces Elevated Climate Risk

New research from First Street finds the world's largest and fastest-growing data center markets are concentrated in locations exposed to flooding, extreme heat, wildfire, wind and drought risk.

NEW YORK, June 18, 2026 /PRNewswire/ -- A new First Street analysis finds that climate risk is emerging as a critical factor in data center investment performance, with physical hazards increasingly shaping operating costs, infrastructure reliability, financing conditions, and long-term asset values across global markets.

The research, Climate Risk in Global Data Center Markets: Implications for Investment and Performance, examines 97 global data center markets and finds that many of the industry's largest and fastest-growing hubs are concentrated in locations facing elevated exposure to flooding, extreme heat, wildfire, wind, and drought. As trillions of dollars flow into digital infrastructure to support cloud computing and artificial intelligence, the analysis suggests climate risk is becoming a key determinant of which markets can deliver durable returns.

Global data center capacity has expanded rapidly over the past decade and is expected to nearly double again by 2030. Yet while investors have traditionally focused on power availability, connectivity, land access, and demand growth, climate risk remains largely absent from many underwriting and valuation frameworks despite its direct influence on uptime, operating costs, insurance availability, and infrastructure reliability.

By analyzing climate exposure across global data center markets, First Street finds:

• 54% of global data center capacity is located in markets exposed to chronic climate stress, including extreme heat and drought, which increase cooling costs, reduce efficiency, and put operating margins under pressure.
• 79% of global capacity faces elevated acute climate hazards, including flooding, wind, and wildfire risks that can disrupt operations, increase downtime, and drive insurance and repair costs.
• Chronic exposure varies significantly across major investment markets. Exposure reaches 89% of capacity in APAC, compared with 50% in the Americas and 46% in EMEA, creating meaningful differences in operating performance.
• The industry's largest growth markets rank among its most climate-exposed. Major hubs including Northern Virginia, Johor, and Marseille sit in the highest climate-risk tier globally, while lower-risk Nordic markets rank among the least exposed.

The findings suggest that climate risk is increasingly differentiating data center markets that may appear similar based on traditional investment metrics but face very different long-term operating conditions.

"Where you build a data center determines a large share of what it will cost to run for the next 20 or 30 years. Climate is a big part of that: cooling, water, and reliability all depend on location," said Dr. Jeremy Porter, Chief Economist at First Street. "But most valuations still focus on growth and treat climate as a secondary concern."

"Most underwriting for real assets still uses historical data, but the climate is no longer behaving the way the historical record would predict. As heat, drought, and water stress increase, outdated models simply don't offer a complete view of risk anymore," said Matthew Eby, Founder and CEO of First Street. "Investors who incorporate these factors into underwriting and capital allocation decisions will be better positioned to identify resilient markets and avoid mispriced risk."

The full report is available at firststreet.org/research.

To learn more or to request a demo, visit firststreet.org or reach out to bd@firststreet.org. 

About First Street:

At First Street, we are on a mission to connect climate and financial risk. For nearly a decade, our scientists have created transparent, peer-reviewed physical climate risk models that quantify the financial impacts of perils such as flooding, wildfire, and extreme wind events for every property in the world. In December 2024, we launched the First Street Enterprise Suite, a global software platform that transforms our models into actionable financial signals for decision-makers worldwide. First Street is the standard for Climate Risk Financial Modeling, empowering asset owners, asset managers, governments, real estate investors, corporations, and millions of homebuyers every day to make climate-informed decisions.

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