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According to the National Association of Real Estate Investment Trusts (NAREIT), the data center sector could double in size in the next several years. Property managers and REITs with tenants managing data centers or significant internet support and computer hardware, should be aware of environmental risks associated with these operations. Does the rapid growth of these structures present inherent environmental risks?  Yes, according to XL Catlin’s Environmental Consulting team. 

Data centers have significant infrastructure support needs, which include cooling systems, backup power supply systems, and fire suppression systems that utilize hazardous materials and chemicals.  Also, to operate these centers, large amounts of heating/cooling as well as energy are required to support the 24/7 operations. There are unique challenges in design and construction of data centers which must use chemicals and hazardous materials such as ethylene/propylene glycol for cooling systems, diesel fuel for backup generators, lead-acid batteries for uninterrupted power supplies (UPS), and compressed gases for fire suppression.

Our vision of most data centers is a large non-descript warehouse type building located somewhere in the rural United States. However, according to a recent article in the Wall Street Journal, data centers are now popping up in shopping centers and malls throughout the U.S. In Fort Wayne, IN, a vacated Target Store is being converted to a data center by a regional data center operator. In another example, a portion of the Marley Station Mall south of Baltimore, MD was occupied by a data center company and during its first year offered to acquire more space within the property.

“While these new data centers might not be eating up open space, they may encounter other environmental issues,” says Greg Shields, Vice President, Environmental Risk Consulting.  “These former shopping and retail centers do pose other problems when converting spaces, such as the lack of built-in security, possible location within a 100-yr flood plain, and adequate room for heating and cooling infrastructure. Also, environmental due diligence performed to support property transactions has the potential to discover historical, preexisting, unknown pollution conditions.”

“All the data that we are exponentially creating and collecting has to be stored somewhere,” explained Mr. Shields.  “In the rush to meet the demand for these centers, we have to make sure, while we protect our data, we also protect our environment – and help our construction, technology and real estate clients involved in data center construction and management to minimize their environmental liability associated with them.”

To learn more about the environmental risks posed by data centers, download XL Catlin’s  Data Centers – Internet technology expansion yields increased environmental risk white paper.  



Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

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