"Real Estate Tycoon" Blackstone: The end of AI is actually real estate

In the surging wave of artificial intelligence, how to quickly iterate AI technology has become a top priority for many tech giants.

However, private equity giant Blackstone Group has provided a different answer: real estate.

On Tuesday, Blackstone Group co-founder Stephen Schwarzman pointed out in a speech that another trend brought by the AI frenzy is the mad rush to acquire land to build data centers.

"The competition to build artificial intelligence data centers is exceptionally fierce, with astonishing amounts of money being invested around the world, a scene never seen before," he said.

Although Schwarzman expressed surprise verbally, behind the scenes, he had long been laying the groundwork for the arrival of the AI era.

As early as 2021, Blackstone Group spent $10 billion to acquire QTS Realty Trust, specializing in acquiring land to build and operate data centers, and then reaping the benefits of the AI revolution through QTS.

In simple terms, it continuously acquires land through QTS, builds data centers, and then leases them to tech giants busy fighting each other.

At first glance, doesn't it resemble the group of people who, during the American gold rush, didn't dig for gold but instead sold shovels?

Indeed, Blackstone has turned the AI business into its most familiar real estate business.

Schwarzman expects these data centers to bring a 20% return on investment, with contract periods lasting up to 30 years.

After all, with the rapid development of AI technology, more and more data is migrating online. Tech giants like Microsoft, Google, Meta, and others need supporting data centers to handle massive computing and storage needs. At this point, relying solely on building data centers themselves cannot meet the rapidly growing demand, so leasing data centers has become a faster and more cost-effective choice.

Building and maintaining a data center is very difficult. You have to deal with issues such as power supply, water supply, local environmental problems, and the impact on residents.

Therefore, "landlords" like Blackstone, who control a large number of data centers, can basically set prices for tenants as they wish. The recent power shortage situation has also given Blackstone an opportunity to raise prices, as its tech giant tenants are all well-off.

For example, an 85-acre data center in the outskirts of Phoenix, Arizona, owned by Blackstone, hasn't been completed yet, but all leases have already been signed, with Microsoft being one of the tenants.

To meet the huge demand for data centers, Blackstone, through QTS, is currently building a 400-acre mega data center in the northwest outskirts of Phoenix, demonstrating its determination to bet on the AI revolution.

Artificial intelligence has generated a significant demand for data centers globally, and private equity giants like Blackstone are using disruptive capital power to meet these demands. By continuously acquiring land to build data centers, Blackstone has established QTS as one of the top data center lessors in North America.

Unexpectedly, after circling around AI, Blackstone has returned to its roots in real estate. Indeed, the end of AI is still real estate