Summary
The rapid expansion of data centers is emerging as a significant economic storyline of the AI era, according to Edward L. Shugrue III, Managing Director of RiverPark Funds. He believes that the implications of this may reach well beyond technology itself. In this context, Shugrue aims to illuminate how the physical infrastructure behind AI increasingly relies on sophisticated capital markets to keep pace with accelerating demand.
Shugrue’s extensive career spans commercial real estate investing, lending, and securitization. As a long-time portfolio manager in the commercial mortgage-backed securities (CMBS) market, he has long examined how capital moves into income-producing real assets and how those flows shift with market cycles. He says, “Capital markets show their true power when assets grow beyond what balance sheets alone can bear.
The U.S. data center storage market is projected to exceed $1 trillion by 2034, reflecting steady growth tied to cloud adoption and digital security requirements. Data center supply in major U.S. markets expanded by nearly 35% year-over-year in 2024, while vacancy rates fell below 2%.
“When I speak with investors, I often come back to a simple question,” Shugrue says. “As AI grows, what does it actually take financially and structurally to build the infrastructure that keeps it moving?” By the end of the decade, more than $500 billion in investment may be required in U.S. data center infrastructure alone, with global capital expenditure on data center infrastructure estimated at nearly $7 trillion by 2030.
According to him, CMBS has emerged as one such instrument. “CMBS has been around for quite a while, but in the early days, it was usually tied to smaller properties, often in the tens of millions rather than billions.” Over time, however, the market has evolved with billion-dollar transactions becoming commonplace in CMBS today.
Industry data from the Commercial Real Estate Finance Council reported that private-label CMBS and CRE CLO issuance surpassed $155 billion in 2025. Within that total, SASB transactions accounted for more than $90 billion. “Many large institutional investors now manage portfolios that can reach into the billions, and their financing strategies often gravitate toward securitized structures that can accommodate that scale,” Shugrue remarks.
Shugrue emphasizes that AI’s integration into everyday economic activity depends on data centers, and data centers depend on capital structures capable of supporting their scale. CMBS, through its evolution toward large, institutional assets, has become part of that foundation. Technological progress and financial architecture advance in tandem, each informing the pace and reach of the other.
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