Go Big or Go Fast: Entering the 2026 Data Center Market While Barriers Have Never Been Higher
episode
The Watchtower - Mission Critical and Data Center Perspectives
26 min
2 speakers
4 chapters
transcribed 1 month ago
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What’s the current state of the data center market in Q1 2026?
Hey everybody, welcome to another episode of The Watchtower by Empirics Partners, a strategic sourcing and procurement advisory specifically designed for the mission-critical space. I'm Zach Pena, CEO here at Empirics, and I'm joined by my Chief of Staff, Ethan Summers. We focus on conversations on the data center industry, providing perspectives and insights into what's changing and the mindsets required for long-term success at scale. Let's get into it.
So Zach, we're sitting here and it is somehow the end of the first quarter. April is right around the corner. It's been a wild Q1. We've seen a lot of people be successful so far this year. We've seen some people struggling. And I think most of all, we're seeing a lot of new entrants to the market. And something you and I talk about a lot is how to enter the data center market. We advise on that. We coach on that. We deal with the consequences of those choices. And it raises an interesting question. If you were going to start with everything you knew now as of, what is it, March 30th, 2026, and start a data center development company today, how would you do it?
God, I don't know if I would. I'm just playing. It's a good question because there's – at this point in time, I think we're probably in the most – I'll call it volatile section of probably the last – I'll call it 12 to 18 months to where – you know, the energy is probably the most scarce it's ever been. Um, land is, I'll call it most definitely there, but not as abundant. Um, you have capital that is pickier than ever. Um, and you have players that are coming in not only from a end user supplier, um, You know, brokers, all types of stuff that are just everywhere. And there's no consistent. This is how you do it anymore. And so it's difficult. But I think if I was to come in today, I would I would sit down and say, what are we actually going after?
Um, and how big, how small, how fast, how slow, um, what is the actual driver that we're pushing? Um, because I think right now people are, are having to be, they're almost serving too many masters, right? Um, to where they have clients that are coming in and saying, I went this much or I went nothing. I went this speed or I went nothing. I want this thing or I want nothing. Um, and, or, We'll work with you until we find a better option. And I think that's what makes this really difficult. So I was kind of joking earlier that I wouldn't come in, but if I had the 100% overall control of the direction, I would come in. And I think that's what we can talk about today is what exactly would be those strategies because I think there is a sweet spot and there's a lot of people missing it.
Mm-hmm.
If we're going to have the conversation, I think we need a level set on where this market is. If you skim the news, skim LinkedIn, you see all the time that it's a huge and growing industry, which is true. AI factories are taking off, which is true. Alternative energy, especially nuclear, is taking off, which is true. And so it seems like just the land of opportunity where there's infinite demand. Pricing is great. Let's get started. And that's all true. But that's all true, in fact, in part because we are in a consolidated market, which can seem so crazy when there's this much demand, this many players moving. But you know it's like that because the walls are up. The barriers to entry are high. And just one example to kickstart the conversation is on the capital side.
Is there tons and tons of capital out there eager to invest in data centers generally? Sure. Is it more sophisticated by the day with higher demands, higher requirements, higher controls? Absolutely. And I think if you're going to talk about getting through or over or under those walls, whatever your approach is, you have to have a really unique approach. And to me, it seems like there's maybe just a couple of approaches that make sense. And going straight up the wall, which is what people have done traditionally, probably isn't going to work in this stage of the industry.
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Chapters
4 chapters
1
What’s the current state of the data center market in Q1 2026?
0:15–4:49
2
Why do Zach and Ethan say barriers to entry are higher now?
4:49–16:39
3
What capital and demand dynamics create a consolidated market?
16:39–24:44
4
Why are some developers choosing a 'build a bigger castle' gigawatt campus strategy?
24:44–26:54
Speakers
2 identifiedMore from The Watchtower - Mission Critical and Data Center Perspectives
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