Jamie Spencer
JPMorgan Chase (NYSE:JPM) and Starwood Property Trust (NYSE:STWD) have agreed to provide a $2 billion loan for the construction of a 100-acre AI data center in Utah, making it one of the largest construction loans in recent years, according to a Wall Street Journal report on Tuesday.
Massive Investment in AI Infrastructure
The loan will finance a data center campus in West Jordan, Utah, developed by a venture between real estate investor CIM Group and Novva Data Centers. Once completed, the facility will be capable of delivering 175 megawatts of continuous power, highlighting the increasing demand for large-scale computing capacity driven by artificial intelligence.
Growing Scale of Data Center Financing
This marks the second major data center construction loan exceeding $2 billion this year, following a $2.3 billion loan issued by JPMorgan Chase in January for a facility in Abilene, Texas. Historically, data center loans rarely exceeded $1 billion, making this a notable shift in financing trends.
The size of AI-focused data centers continues to grow due to the increasing power requirements of advanced computing chips. Additionally, developers are securing larger loans by pre-leasing facilities before construction begins, reducing project risk and making these investments more attractive to lenders.
Phased Development and Strategic Location
Construction of the Utah data center began in 2020 without any signed leases, as the developers needed to validate the design, according to CIM co-founder and principal Avi Shemesh. The first phase of the project opened in 2023, and the entire facility is expected to be fully operational by the end of 2026. It has already been fully leased, demonstrating the strong demand for AI-capable data centers.
Utah was selected as the site due to its low risk of natural disasters, making it an ideal location for critical infrastructure. However, the region faces water scarcity challenges. To address this, the CIM/Novva project has implemented a water recirculation system to efficiently cool the computing equipment.
A Sign of AI-Driven Expansion
The $2 billion loan for the Utah data center underscores the rapid expansion of AI infrastructure and the growing willingness of financial institutions to fund large-scale computing facilities. As AI technology advances, demand for high-powered data centers is expected to rise, pushing investment in the sector to new heights.
