Not Like Your Father’s NNN Lease: Why Data Center Investing Requires a New Playbook

The surprising realities of owning and leasing real estate for data centers.

Think you understand triple-net leases? Think again. In the world of data centers, the classic "set it and forget it" mentality of traditional real estate investing gets thrown out the window — fast.

Owning a data center isn't just about collecting rent; it's about guaranteeing uptime, sharing operational risk, and managing infrastructure as actively as your tenants. Welcome to the future of real estate — and it’s not your father’s NNN lease.

Traditional real estate investors are often drawn to data centers for one simple reason: demand is booming. The digital economy shows no signs of slowing, and data centers — the factories of the internet — are at the core of that growth.

But here's the problem:Most real estate investors approach data centers using outdated assumptions built around office, retail, or industrial leases. And in the world of digital infrastructure, that’s a costly mistake.

In a traditional NNN (Triple Net) lease, tenants take full responsibility for property expenses: taxes, insurance, and maintenance. Landlords simply collect rent. But in a data center lease — especially when you're offering powered shells, colocation spaces, or full-build solutions — the expectations change dramatically.

Tenants expect landlords to:

• Maintain the critical mechanical and electrical infrastructure

• Guarantee uptime through Service Level Agreements (SLAs)- Share liability if there’s a failure that impacts operations

• Proactively upgrade systems to keep pace with technology

In short: You're not just a landlord — you're a mission-critical partner.

Breakdown: Why Data Center Leases Aren’t Passive Income Machines

1. Service Level Agreements (SLAs) Are King

   Tenants expect guarantees on uptime — often 99.999% (aka “five nines”). If your generator, UPS, or cooling system fails, you’re responsible. This isn’t just about property maintenance; it’s about business continuity.

   
   

2. Capital Responsibilities Stay With the Landlord

   Forget "tenant responsible for all repairs."Major systems like backup generators, fiber infrastructure, chillers, and battery rooms often remain landlord-maintained. Upgrades are your burden — not theirs.

   
   

3. Risk Allocation Is Shared

   Traditional leases push all risk to the tenant. Data center tenants will negotiate for shared liability on things like downtime losses, SLA violations, and service outages. Landlords must ensure, monitor, and manage risk — actively.

   
   

4. Maintenance Isn’t Reactive — It’s Proactive

   Preventive maintenance on critical systems (generators, UPS, cooling) is mandatory — not just advisable. And it has to be documented meticulously for tenant compliance audits.

Actionable Advice for Investors:

If you're considering a data center investment:

• Expect to stay involved. Passive ownership doesn't exist here — you're managing uptime, not just walls and roofs.

• Build technical expertise (or hire it). Your team needs to understand power distribution, cooling, and redundancy.

• Structure your leases carefully. Involve attorneys and engineers who understand SLAs, uptime guarantees, and infrastructure responsibility splits.

And most importantly: partner with groups who understand these realities.

At Infrascale Systems, we specialize in helping investors navigate the complexities of real estate solutions for data centers — from site selection and infrastructure upgrades to leasing models that align interests between owners and tenants.

If you're serious about moving into digital infrastructure, make sure you're building on a foundation of expertise.

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