How Will Alberta’s New AI Data Center Impact Real Estate?

Question

Hey everyone,

I recently started my real estate investing journey in Edmonton, AB, because I see it as an undervalued market with a lot of potential. I also heard that there are plans to build the world’s largest Artificial Intelligence (AI) data center in northwest Alberta. (Here’s the link to the article: https://www.ctvnews.ca/edmonton/article/largest-ai-data-cent...)

This got me thinking…

1️⃣ How do you think this data center will impact the real estate market in Alberta, especially in Edmonton?
2️⃣ Are there any smaller towns or cities nearby that might see a big boost in demand over the next few years because of this project?
3️⃣ Would buying land near the data center make sense as a short/long-term investment?

If there’s a smart way for real estate investors to take advantage of this, I would like to hear about it.

Anthony Therrien-Bernard · Answer

In my IT days I've spent lots of time in various data centers around Calgary. While the scale of these AI data centers is larger than most of the existing ones we have in Calgary (we have a lot of them btw, but most people have no idea, and you likely have driven in front of multiple of them without knowing), the staff required to operate them is VERY minimal. So I'm doubtful there will be much impact once construction is over. I'm very excited for all the technology investments we are getting in Alberta, but I'm actually concerned how these will impact our electricity market given they plan to connect directly to natural gas power plants.

Ken Didychuk · Answer

@Arzu Irem Aydogdu *If* these centers are approved, and right now, that is a huge *if*, all of Alberta will benefit. By rate of comparison, the $1.6B expansion to the Red Deer hospital will be employing 300 electricians. How many other tradespeople are needed for such a project? Now extrapolate that to O'Leary's $70B project? Now add in another half dozen smaller data centers along the foothills. The size of that workforce would be ridiculous. Real Estate all across Alberta would be in demand with maybe the smaller towns/communities seeing the greatest increase. You wouldn't necessarily have to invest up near GP. Find a community that would be a good investment under *any* circumstances and you will never go wrong.

Ken Didychuk · Answer

@Stevo Sun The workforce needed to operate these data centers (I believe there are well over a dozen sites that are proposed) may not be as large as the oilpatch, but the workforce needed to build them would be immense. Not to mention all the subsidiary jobs that will be created to support such an influx of trades. Also, these sites are chosen because of their direct access to natural gas for essentially unlimited electricity potential. This means that there will be immediate demand (customers) for natural gas right in our own backyard. The oilpatch will benefit for ongoing production and continual maintenance. Another reason for these sites up here is the incredible amount of heat these data centers generate. The ongoing costs in a cold weather climate are greatly diminished, not to mention the relatively easy access to water for those same purposes. As you mentioned, who knows if this will come to fruition, but the economic potential is absolutely incredible.

Stevo Sun · Answer

The potential is undeniable, but who knows if and when it will happen. The data center construction depends on the level of data center that is constructed. These are large projects but the ongoing maintenance is not as big as the oil patch. It will be a boon for the province for sure. I actually think your point about natural gas is very key, this solves Alberta's stranded assets problem, which will be helpful long term. I actually think the major cities will benefit (like Calgary and Edmonton) from HQs and smaller towns will benefit with operational centers. But again this is speculation on whether if this happens in our investment life time.

Theresa Harris · Answer

I think if it happens, it would help diversify the economy, but as Stevo said a lot of Edmonton and Calgary are dependent on the energy sector and what they do, real estate tends to follow.  Just look over the last 20 years and you can see how housing has fluctuated.

Stevo Sun · Answer

That's speculation at this point. A lot of things get announced and doesn't materialize (or the timeline is way off). Small towns can give you significant returns and also carry significant risk. Fort Mac is one example in Alberta where it is boom and bust with the oil cycle. AI should be more stable, but data centers also don't take the same level of workforce as oil and gas.