Power Could Become the Next Big Constraint on Boise Commercial Real Estate Development
For years, commercial real estate development in the Treasure Valley has revolved around familiar questions.
Is the land available? Does the zoning work? How much traffic passes the site? Is there enough water and sewer capacity? Can employers find workers?
Increasingly, another question belongs near the top of that list:
How much electricity can the site actually get?
The rapid expansion of artificial intelligence and data centers is forcing utilities, technology companies, policymakers, and developers across the country to confront the enormous amount of power required for the next generation of digital infrastructure.
That debate could eventually have significant implications for Boise commercial real estate, Idaho industrial development, land values, infrastructure planning, and site selection.
According to reporting by Tim McLaughlin, Jacob Bogage and Jarrett Renshaw, published by the Idaho Business Review, President Donald Trump recently announced a voluntary initiative intended to push large technology companies and data center operators toward paying for the additional energy infrastructure their projects require.
You can read the original Idaho Business Review article.
The political debate will continue. But from a commercial real estate perspective, the underlying issue is much bigger:
America wants more computing power, and computing power requires physical infrastructure.
AI Is Turning Electricity Into a Real Estate Issue
Data centers can look deceptively simple from the outside.
They are often large industrial-style buildings without the customer traffic associated with retail or the employee density of a traditional office campus.
Behind the walls, however, they can consume tremendous amounts of electricity.
That creates a challenge.
The country is simultaneously trying to support AI investment, modernize an aging electrical grid, replace retiring power plants, expand transmission capacity and keep electricity affordable for households and businesses.
The Idaho Business Review article highlights just how significant the problem has become.
In PJM Interconnection—the massive regional electrical system serving approximately 67 million people across portions of the eastern United States—data centers were responsible for $6.3 billion in capacity-market costs, representing nearly 40% of the total in its latest auction.
PJM’s experience matters to Idaho even though Idaho is not part of that system.
It provides a preview of what can happen when electricity demand grows faster than generation and transmission infrastructure.
And that should get the attention of anyone involved in Boise development.
The economics of a development site are changing
Commercial real estate professionals traditionally evaluate land based on location, zoning, access, visibility, demographics and utility availability.
But “utilities available” may no longer be specific enough.
For certain projects, the better questions may become:
How much electrical capacity is actually available?
How quickly can additional power be delivered?
Does the utility need major upgrades?
Who pays for those improvements?
How long will interconnection take?
Those questions can dramatically change the economics of a property.
Imagine two industrial parcels with similar zoning, highway access and land prices.
One can receive the necessary electrical capacity relatively quickly.
The other requires expensive infrastructure improvements and several years of waiting.
Those sites may look nearly identical on a commercial listing.
They are not equally valuable to the end user.
That difference could become increasingly important for Boise industrial real estate.
Idaho Could Benefit From the AI Infrastructure Boom
Idaho has several characteristics that could make it attractive for technology-related infrastructure.
Land remains relatively available compared with many coastal technology markets.
The state has a business-friendly reputation.
Idaho also already has an established technology and semiconductor presence, particularly through Micron’s major operations and investment in Boise.
Gov. Brad Little’s attendance at the Washington event highlighted Idaho’s interest in the national discussion surrounding data centers and energy infrastructure.
But attracting data centers is not simply about finding enough acreage.
Power may determine which communities can realistically compete.
Large technology users increasingly evaluate electrical infrastructure very early in their site-selection process.
For economic development groups and municipalities, that means industrial recruitment may increasingly require coordination among landowners, utilities, local governments and infrastructure providers.
A community can have hundreds of acres of industrial land.
If the necessary power cannot reach it, that land may not work for a high-demand technology user.
Power availability could create winners and losers
This could eventually create a new dividing line within Idaho commercial real estate.
Properties with access to substantial electrical capacity may command greater attention from certain industrial and technology users.
Properties without it could face longer development timelines or expensive infrastructure requirements.
That does not mean every industrial property needs data-center-level power.
Most do not.
But the broader increase in electricity demand matters because major users compete for capacity within the same larger system.
A new data center, semiconductor operation or advanced manufacturing facility can require infrastructure investments that affect surrounding development patterns.
That is why the conversation should interest more than data center developers.
Manufacturers should care.
Industrial landlords should care.
Cities should care.
Land developers should care.
And businesses evaluating expansion sites should care.
The Consumer Cost Question Can’t Be Ignored
The political controversy surrounding data centers largely comes down to a straightforward question:
Who pays for the infrastructure?
The Trump administration’s voluntary initiative calls for large technology companies and data centers to fund or construct the infrastructure necessary to support their electrical demand.
Supporters argue this approach can help expand AI infrastructure without shifting the cost onto ordinary utility customers.
Critics question whether voluntary commitments provide enough protection.
That debate is happening while electricity costs are already expected to rise.
The U.S. Energy Information Administration projected average residential electricity prices would increase 5.1% in 2026, followed by another 2.4% increase in 2027, before adjusting for inflation.
For commercial real estate, electricity costs matter in several ways.
Higher utility bills increase operating expenses for tenants.
That can affect restaurants, manufacturers, grocery stores, fitness operators, medical users and other businesses with substantial energy requirements.
For landlords using triple-net lease structures, utility expenses may be paid directly by tenants, but rising costs still affect occupancy economics.
A tenant ultimately evaluates the total cost of operating from a location—not simply the advertised base rent.
That makes energy increasingly relevant to retail leasing in Boise, industrial leasing, and business site selection.
Data Centers Also Bring Local Development Questions
Communities across the country are increasingly debating whether the economic benefits of data centers outweigh their infrastructure and environmental impacts.
The projects can bring major capital investment and expand the tax base.
But they can also consume significant amounts of electricity, require substantial infrastructure and generate relatively limited employment compared with the size and cost of the facilities.
Some communities have also raised concerns about noise, water consumption, environmental impacts and effects on utility costs.
Those tradeoffs matter for Idaho.
A data center may look attractive from an economic development standpoint because of the investment involved.
But cities should also ask what infrastructure must be built to support it and what opportunity costs come with allocating that capacity.
This becomes particularly important in fast-growing areas where residential, industrial and commercial projects are already competing for infrastructure investment.
Local Insight: Electricity Could Become the New “Location, Location, Location”
Commercial real estate has always been about location.
I don’t think that changes.
But what defines a great location can change.
For retail, visibility and traffic remain critical.
For restaurants, demographics and customer access matter.
For office users, workforce and amenities can drive decisions.
For the next generation of industrial and technology projects, power availability may become one of the most important location factors of all.
That could have interesting consequences for the Treasure Valley.
Industrial land near highways has traditionally received much of the attention.
In the future, proximity to substations, transmission infrastructure and available electrical capacity may become another major piece of the valuation puzzle.
That creates an opportunity for landowners and developers who understand infrastructure before bringing property to market.
Instead of simply advertising acreage and zoning, industrial property marketing may increasingly need to document:
- Available electrical service
- Nearby substations
- Potential expansion capacity
- Utility upgrade requirements
- Estimated delivery timelines
- Natural gas availability
- Fiber connectivity
- Water and sewer capacity
That information could become increasingly valuable to sophisticated tenants and buyers.
For developers, I would also argue that utilities need to move much earlier in the due diligence process.
Finding out after acquiring land that a project requires major electrical upgrades can fundamentally change the economics of the deal.
The same principle applies to businesses evaluating Boise commercial real estate.
The cheapest building is not necessarily the cheapest place to operate.
A slightly higher-rent property with sufficient power and infrastructure may ultimately cost less than a cheaper building requiring substantial upgrades.
What Boise Commercial Real Estate Should Watch Next
The national fight over AI infrastructure may feel far removed from everyday leasing and investment decisions in Boise.
I don’t think it is.
AI is creating physical demand.
That demand requires data centers.
Data centers require land.
Land requires infrastructure.
And increasingly, the infrastructure bottleneck may be electricity.
That chain could influence industrial development, land pricing, utility investment and economic development strategies across Idaho.
It may also create opportunities.
Communities capable of delivering reliable, competitively priced electricity could have an advantage in recruiting advanced manufacturing, semiconductor, technology and data infrastructure projects.
Industrial land positioned near the right infrastructure could become more valuable.
Existing buildings with substantial power could become more difficult to replace.
And developers who understand utility capacity before competitors do may find opportunities others overlook.
The AI boom may be digital.
The real estate supporting it is very physical.
For Boise and the Treasure Valley, the next major development opportunity may not simply be about finding land.
It may be about finding land with power.
Mike Gioioso (joy-OH-so) has for 16+ years been helping companies of all sizes buy, build, and lease perfect places for business in greater Boise, Idaho and beyond.
www.streetsmartidaho.com mike@streetsmartidaho.com 208-209-9166
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