[00:00:00] Intro: This is the Texas Land Guys Podcast hosted by brothers Tim Dosch and Tom Dosch. With their partners David Marshall and Tripp Rich, they have built DMRE, the leading land brokerage in Texas. With decades of experience brokering deals between landowners and real estate developers, they take you inside the deals that move the market.

[00:00:28] Tom Dosch: Welcome to the Texas Land Guys Podcast. Tim, how are you doing this morning?

[00:00:32] Tim Dosch: I’m doing great. How are you?

[00:00:33] Tom Dosch: I’m good. I think this is going to be maybe one of the most important episodes we’ve ever done. We’re going to be talking about big bad data centers. That’s become a pretty amazing narrative over the last probably, you know, 3 to 6 months that people are more against data centers than nuclear power plants right now in our country. So an important topic for us to hit.

[00:00:56] Tim Dosch: Yeah, you think of the parallel and with nuclear power plants, you know, there was a pretty real story with Three Mile Island and obviously Chernobyl and Russia that even though they’re actually very safe, that there could be like a nuclear explosion and people could die and people could have radiation issues and all that. And so there was, I think, a somewhat realistic fear, even though it ended up being pretty dramatized by the media. But it’s funny because I was actually thinking back, when did we start working on data centers? This is like 4 years ago. I mean, it was, it was pretty far back. We started having groups come to us. And at first it was very kind of like speculative, like, is this a real deal? It kind of reminded me of these big solar farms, you know, where you get a group who wanted to do a solar farm and you’re like, do they have money? Is this real? You know, is this like worth spending time on? And so data centers kind of felt the same way. And we were always kind of trying to figure it out because it was, it was like there’s these different developers or groups or not, didn’t seem super sophisticated, you know, they were trying to do them and we weren’t really sure, like, are they real or not? And then I feel like it’s really transitioned in the last couple years. Maybe it’s the last, would you say it’s almost like 6 to 12 months that all this negativity has really started? ‘Cause I mean, if you go back not too far and it wasn’t seen in a negative way, I mean, it was probably one of the more exciting things people talked about in commercial real estate. It was sort of like this cutting edge, like high tech. Everybody wanted to be a part of it. People wanted to do those deals, invest in those deals. And now it’s just become super political.

[00:02:21] Tom Dosch: I think that’s right. I mean, I probably remember us working on and talking about some data centers, you know, over 10 years ago, but that would have been like the old model data center because there’s been data centers for a long time, but it wasn’t these really big, huge, like hyperscaler facilities that you’ve seen now with like Amazon and Google and these massive multi-billion dollar data centers that are being built. And I think Dallas, the Dallas area has the most of them in the country. Texas is the data center capital of the world. Texas has been very pro data center in general. But to your point, negativity around data centers, I think it’s a pretty recent thing and it’s only been building.

[00:03:00] Tim Dosch: Yeah.

[00:03:01] Tom Dosch: Kind of alongside the argument, the anti-AI argument, because data centers are very tied to AI because the need for compute has gone up so much, the need for processing has gone up so much. And so there’s a need to build these data centers. And then when they’re getting built, Elon Musk has his Colossus 1 and 2 data centers. He’s immediately signing over deals with, you know, Google and OpenAI and Anthropic to be able to come and take his capacity because they need it. It’s like as soon as it comes online, it’s taken because there’s such a race right now for compute.

[00:03:34] Tim Dosch: No, that’s right. It’s interesting. It almost seems like it was really AOC and Bernie Sanders have maybe been the ones who’ve really, I don’t know if they’ve started this, they’ve definitely jumped on the bandwagon of being anti-database. I know AOC has these videos where she’s holding up like brown water and claiming that people have to drink brown water if they’re by a data center because everything is like toxic. And so you have like a lot of these kind of publicity stunts, you know, that some politicians are using to try and create the narrative of these AI companies don’t care about the people and they have these data centers that are hurting the people and people are suffering because of this. And so we have to have this moratorium and stop them because they’re so bad. And so that feels like literally the last maybe 3 to 6 months that I’ve really heard the political side going pretty extreme almost in what they’re saying about it, because it doesn’t feel like a balance. And then we want to talk kind of about the pros and cons, like what’s the best argument against data centers or maybe cautionary about data centers. And then what are the arguments for it? But it seems like what I’ve heard, the argument against it has been almost just pretty extreme, not like a very irrational argument, but a pretty clearly, you know, just kind of extreme argument that doesn’t have a lot of basis in reality.

[00:04:47] Tom Dosch: Well, I want to set the argument to, or just really set the episode with data centers are not a luxury use. Like this is as important as railroads, highways, airports, power plants have been. This is the modern economy. You can’t run the digital economy without data centers. And so I don’t think you, you have to be careful you don’t separate the fact that the populace, which is so against data centers, actually in practice is very for data centers. They don’t want to lose their streaming. They don’t want to lose their ability to do what they do digitally, you know, whether that’s they want to go, you know, watch sports, Netflix, or they want to go interact with ChatGPT. I mean, you think about a billion users of ChatGPT. Claude’s growth is like 600% right now. You said this earlier, you’re not going to be very happy if Claude becomes more and more expensive, or if you’re not able to use it because there’s not a lot of computing power. People are almost going to get to the point where they feel like that’s a right to have these different digital services, but you can’t have both. Like you, you can’t not have data centers and have these digital services. So it’s important to recognize that it’s a, it’s actually a very crazy argument to just be completely against it. So I think what we’re hoping to talk about today is let’s go through the negatives and then let’s go through the positives of data centers, because right now in the populace’s mind, it’s just dead on arrival. If you hear data centers coming, it’s just dead on arrival. I think you said you were talking to a family member that was just against it, and then you were like, well, tell me why. And there wasn’t really like a reason. So it’s thinking through like, how do we have more well-thought-out reasons and not just be you know, basing our views on like clickbait. ‘Cause I see the same thing with articles that are, it’s like a picture of, there was one that was like a picture of a skyline. I think it was like Atlanta. And it was like, everybody had water until this data center came and it kind of showed like dead grass. It was the middle of winter and it was like, they’ve taken all the water in Atlanta. I was like, what? I’m pretty sure that’s not true. Like, I don’t even have to go do too much research to know that like the one data center didn’t take all of Atlanta’s water.

[00:06:45] Tim Dosch: Yeah. Well, what’s crazy is if you look at what happens with innovation and progress, everything gets cheaper and it gets available to, to more people. They call it like a democratization of innovation, you know, where at first it’s like the people that can afford the $10,000 computer or whatever when they came out, you know, this bulky big thing, only certain people can have it. But then over time, it’s like where everybody has one, you know, everybody has an iPhone. Like all these things we’ve come to just almost think it’s our right. You know, everybody should be able to afford these things because it’s part of our lifestyle. And so if you support a wise, discerning way of expanding power and investing in infrastructure like this, everybody can have use these tools. They can benefit from these tools, and they actually get cheaper and cheaper and better and better over time. What will happen if we don’t do that is some people will still be able to use them, but it’s going to be the wealthy people. It’s going to be the companies that have the money to go to go spend money on this, to go, you know, get the smaller pie of compute and power to, you know, for these frontier models that they can be used and they get to use it to benefit from it. And then the average person doesn’t get to benefit from it and doesn’t get to use it, or it’s just so expensive they can’t afford it. And so it’s really funny that the people who are trying to champion the little guy are actually going to make it not even an option for the little guy.

[00:08:06] Tom Dosch: Mm-hmm.

[00:08:06] Tim Dosch: And so I think that’s kind of what you’re saying. And we want to think about how do we expand these things, because it really is the backbone of the new economy and there really isn’t a choice. The question is more, is there a way to do it that’s better, that actually is protecting people’s interests and not taking advantage of some people?

[00:08:24] Tom Dosch: Well, maybe it’s good to start by talking about one of the big arguments against data centers is their impact on resources, and water is often cited. as one of the main, you know, arguments against data centers, that it takes so much water to cool a data center that, that we’re running out of water in all these different places. And now we want to build data centers and now we’re not going to have good drinking water. And you mentioned the whole brown water thing. I mean, I think that type of a narrative, that type of an argument you could see spreading really quickly. Like we’re going to build this big box, you know, that’s going to be huge. And now this whole city. This little town next to that, you know, development won’t have water. And I think what’s interesting to know about data centers, and I was doing a little bit of research on this because I’ve heard this, there’s now starting to be more just work done to combat some of these arguments because those are not overly sophisticated arguments just to say like, it’s a really big development and it needs a lot of cooling. So because it uses water for some of the cooling, then it must use a lot of water. So we won’t have any water. And that’s like the argument. And so a really common way that people are thinking about this is something that all of us can relate to is an almond. It’s like an actual almond, the actual nut, which is, you know, a tiny nut. An almond requires about 1 gallon of water per almond. And so a crazy amount. So you look at, you know, most almonds are coming from California. So the California almond industry is enormous, so enormous that the amount of water that the almond industry in California is consuming annually is about 1.3 to 1.6 trillion gallons of water a year. And what’s funny about this and what people are saying is no one is out picketing almonds right now. Like if it was really about water, then we would be concerned about almonds and it’d be like, hey, don’t add that almond milk to your latte or don’t have that snack because this is bad for our environment. Like you’re, you know, we need this water. Especially California, they have water shortages and they have issues. They have wildfires, all the things they deal with. So you kind of wonder, like, is it really about the water? Because data center water consumption doesn’t come close to that. There’s estimates of, you know, there’s some people that have cited that it’s about an 80th of what you see with almonds to even like very charitably, maybe it’s more like a 10th if you looked at it, but it’s, it’s nowhere close to just, and we’re just talking about almonds.

[00:10:43] Tim Dosch: Yeah.

[00:10:44] Tom Dosch: And so again, like almonds are great. I love almonds. I think it’s a nutritious snack. That’s not really a requirement of the modern society, but data centers are. And so I think trying to frame this in just a good, like in a, in a very pragmatic, just argumentative standpoint, it’s like, is it worth killing data centers, limiting our whole economy over this water issue?

[00:11:05] Tim Dosch: Well, I think another thing that’s important is the, the way it’s presented is like there’s zero regulation and, you know, there’s an opportunity for these greedy data center developers to come in and just take all the water and take all the power, you know? And that’s just not the way the market works. I mean, we’ve had some of the same conversations with development, especially here in Houston with flooding. You know, people just assume like all these greedy developers come in, they build these new deals, and then that’s what causes flooding. But the truth is the new deals are so heavily regulated that they have to overbuild detention. They’re not underbuilding detention. They’re actually creating more detention. The deals that are flooding are flooding because there’s these legacy deals that were built before there were really strong detention requirements that don’t have adequate detention, so they flood. So it’s just, it’s just a wrong narrative, but people believe it. Oh, there’s all these developments and now we have all this flooding when there’s actually much more money being spent on detention and on infrastructure to control flooding. So that’s, I think, an important point. And I think when you look at these data centers going in, there’s a lot of whether it’s counties or states, you know, where they’re engaging with this, where they’re making sure there’s enough water, that there’s enough power. I mean, one of the problems with data centers is it takes like 3 to 4 years to even get the power to actually build the deal. They’re not just going in and building them and demanding power and being given power that’s being taken away from other users. And so I think that’s just a flat-out lie that people,  what’s interesting about these kind of things is people want the simple narrative. And so it’s a very simple narrative like, oh, it just takes all the power and all the water. But just because it’s a simple narrative doesn’t mean it’s a true narrative. And I think sometimes there’s,  it’s a little bit more complicated. There could be situations where it is taking a little bit too much water power. And so we should look at those and figure out why that happened. How do we prevent that in the future? We shouldn’t just say we shouldn’t do data centers. But what’s interesting is if you look at the Gulf states, you know, like the UAE, for example, some of the largest data centers in the world are in the UAE. They’re actually using water from the ocean. They’re using these salinization plants to take all the salt out, and then they’re actually using that water for their data centers. And so there’s ways to solve this. I mean, they’re a very progressive society that’s figured out how do we build these massive buildings and massive City in the desert where we don’t have resources, but we can actually use smart technology to create adequate resources. And so I think I wish that we were thinking in those terms instead of making it political and trying to stop it. If we were thinking, how do we solve these problems? Because actually, the more we solve these problems, we benefit the little person, the average person, that is the person who’s being left behind by this. We want to help them have the most opportunity and not be left behind. So we’re not protecting them by making things so expensive they can never afford it.

[00:13:49] Tom Dosch: Yeah, well, it’s a good point. Maybe power is a good,  another resource just to talk about. So these data centers, like you said, they do require a lot of power. And so when you are going through the process of a data center development and you are working with a local power provider to determine, is there enough power for this data center? Like you said, you have to do a load study. You have to put up what’s now become really significant deposits. I mean, I’ve heard deposits anywhere from like $6 million to even more than $6 million that you’re having to put up to be able to basically do these load studies and then reserve power ahead of the future data center development. And what these data centers are allowing for these power providers and these grids is really significant development. And so yes, they will ultimately require power. And so they will tax the grid, but they’re also allowing for really significant investment in our power grid. And that’s because they’re signing long-term deals so they can sign, you know, 15 to 30 year commitments on these data centers. And then that’s allowing a lot of these power providers to kick off these, like, you know, in some cases we’re talking about like billions of dollars of infrastructure improvements. And so I think a really good analogy to this is the railroads and what happened in our country when we had these, you know, railroads that were built all across our country, connecting everything, allowing for transportation, allowing for distribution. And before that, it was a completely different way that we were moving both people and goods around our country. And the railroads really opened that up and they became part of what was so important to the Industrial Revolution. Without investments in our grid, which this allows, you’re going to have a similar problem. And so I think that it is important to understand, like you said, that it’s not just we’re experiencing blackouts because the summers are hot in Texas. And now a guy decided he wants to build a data center so he can build it. And now we’re going to have worse blackouts. I mean, they have to do, they have to spend a lot of money and they have to go through a long process and they have to go through these load studies. They have to reserve power. Like this is all regulated already, you know, and it’s all thought out. And then there’s also a significant investment that goes into it too.

[00:15:54] Tim Dosch: Yeah, I think just, you know, one of the honest challenges we’ve had on the real estate side working on these deals is it takes so long to get them done that most sellers don’t want to wait around for it. We’re seeing some sellers who are willing to wait around and there’s obviously, if you can get one done, you can sell the land for a lot of money, but they’re so speculative because of the power issue. And so we had a deal here in Houston that was, we were really close on a data center deal, but it was going to take 3 years to get the power. And our seller was like, man, I’m not going to wait around 3 years and then maybe it doesn’t happen. I’m going to go sell this to a multifamily guy and let them develop it. And that’s what happened. So I think at least on the brokerage side and the investment side, there’s so much risk and speculation. You know, a lot of times you’re having to go put up non-refundable earnest money and control these sites. For years, which it just is tremendous risk to the investor or the developer, because if it doesn’t pan out, you just lost that money. It really has been something that’s, I mean, I don’t know if you’d agree, Tom, it’s a, we are working on them, we’ve done some work on them, but it’s a little bit lower priority because they’re just so, so difficult. And that might go a little bit against the narrative of they’re just popping up everywhere and they’re happening and they’re super easy to get done. I would say it’s the hardest type of deal to get done. It’d be easier to do a master-planned community that’s 1,500 acres than to do a, you know, a big data center deal.

[00:17:10] Tom Dosch: I think that’s what concerns us is that, you know, you would hope that the narrative is it’s very important right now that we figure out how to develop data centers. And so let’s come up with a way that we can actually allow that to happen. The biggest hindrance so far has just been investment in our grid, in the power grid. And instead, the way it’s being approached is it’s one-off players trying to go and find places where they can maybe find power. And then now you have all kinds of lawsuits, all kinds of regulations coming against data centers and this big narrative just against data centers, which is a real problem because you would hope that we would be working in our society to say, this is really important. Again, this is not a luxury. This is like the backbone of the modern economy. If you want a digital economy, this is what it looks like. You have to have data centers. China has figured this out. They have plenty of data center development. They have plenty of power development because they understand that first, you need the power, then you need the data centers. And so instead, we’re talking about moratoriums and regulations and limiting. And I think that’s a big concern because of how necessary this is. And so, uh, to your point, Tim, there’s, you know, 70, I think, data centers, like, announced, proposed in Central Texas, but I think a small percentage of those actually get done, you know, actually get developed, actually get reserved power. There isn’t the ability. The way we’re set up, the level of opposition. Now, how many of those should get done? We probably actually need a lot of those to get done, you know, if we actually have the power for it, which there’s probably not. Unfortunately, the way it’s being approached right now, it’s not coordinated, just the way that groups are trying to navigate the system. So I think from a resource standpoint, that’s probably the biggest, like, pushback on data centers is environmental concerns, water and power. The good thing, and you already mentioned this, as technology advances, as things get cheaper, they also get much more efficient. And so we’re already seeing a lot of that, like Amazon saying that 90% of the time they are able to use like outdoor cooling now on some of their newer data centers, which is significant. And then they’re, you know, they’re, some of the numbers they’re reporting on just the efficiency are so much below what is cited as like an industry average in a good way. Like they’re just becoming way, way more efficient in what they’re requiring from a resource standpoint. And so I think you’re going to continue to see that because they’re motivated. The more efficient they can be, the less resources they’re requiring, the better. The problem is we can’t limit them to say like, if you don’t hit these like almost like impossible hurdles, then you can’t build any data centers because we actually do need the data centers now.

[00:19:41] Tim Dosch: Well, I think what’s interesting, we were talking about there’s a need for data centers because it’s the backbone of our economy, because it makes everything cheaper for just the general population and more accessible for the general population. The other, you know, big factor here is we’re in this arms race with China. You could compare it to the nuclear arms race we had with Russia, you know, back during the Cold War. It’s a very competitive race. Yeah, I think a lot of people think that we’re ahead of China right now, but you and I were talking before we started recording, and, you know, if you look at it from just a power standpoint, China’s already won. I mean, if you look at what they’ve done with nuclear, and I don’t have the the raw numbers, but at the time that we basically stopped developing nuclear in our country back in the early ’80s, they started developing and they’re now the number one nuclear power country in the world and they keep doing more nuclear power. So I mean, they’re so far ahead of us with that and with their solar technologies ahead of us, we’re never going to catch up. And so you could look at it and say we’ve already lost because we’re just never going to be able to have the kind of power that they have, even if we were really just willing to go for it here in the US, which our whole conversation is, we’re not going to go for it. But what you were saying, which I think is a good point, is like the one hope right now is that Elon is actually able to do what he says he’s going to do and go put these data centers in space, potentially on the moon, which solves a lot of the cooling issues and it gives you, you know, the direct access to the power of the sun. And so there, we still have a shot, but I think that it’s important for people to understand that context. There’s a national security context. That is very significant, you know, for the future of our country and our place in the world.

[00:21:13] Tom Dosch: Well, I’m just going to put some stats, Tim, to what you just said about China and the US, because I think these are actual stats. So we’re not just conjecturing here. So China produces 2.2 times the amount of electricity as the United States. They are growing rapidly. They generate more electricity than the US, the European Union, and India combined.

[00:21:34] Tim Dosch: Wow.

[00:21:34] Tom Dosch: You could say, well, they have a massive population. They do, but their population is not that different than India’s. And so you put them with India, with the U.S., with the European Union, and it’s more. And it talks about how the United States are, breaks it down by type. You know, we’re, we’re relatively flat in our growth and they have more than doubled since 2010. So again, like, well, what’s it going to look like in the next 10 years? Because you can’t just like build nuclear power plants overnight. To the point we were discussing earlier, I think that with the SpaceX IPO and with the vision of getting data centers in space, we can have data centers generating power at a much lower cost. It’s probably the only way to try to quickly start to catch up to the trajectory that China’s on.

[00:22:17] Tim Dosch: Yeah, I mean, and that could be a way that we stay pretty far ahead because of how incredible that technology could be. But it is frustrating that we have It seems like we have people who are working against the progress and not being constructive to it. I think it’s very good for people to voice, hey, there’s challenges here. We need to overcome these problems. You know, how do we create more power? How do we make sure it doesn’t take away from other users on the grid? How do we handle the water situation? You know, really being practically, how do we overcome those things? But what you see a lot of times politically is just, we’re going to oppose this. And there’s not gonna be any constructive, you know, way to work on or practical way to work on it. We’re just gonna flat out oppose it. And I think that could really be damaging for, really for the people that they’re saying they’re trying to protect.

[00:23:03] Tom Dosch: Well, a big reason why there’s this push now, and it’s not just Elon, there’s others now, and Google’s looking into data centers in space. That sounded pretty crazy not long ago. And now, you know, it’s, hey, we wanna get data centers in space like next year if possible, as soon as possible.

[00:23:19] Tim Dosch: Yeah.

[00:23:19] Tom Dosch: As soon as feasibly possible. Unfortunately, a lot of that is because of the regulation here, the regulation on terrestrial data centers. And so I think what the populace is maybe not realizing is what you miss out on from an economic standpoint. You do miss out on jobs. Now, a data center is not going to create maybe the same number of jobs as like a, you know, a normal industrial or commercial facility of that size, but it still creates a lot of jobs, both direct and indirect. And then even probably more impactful than that from an economical standpoint is going to be taxes. I mean, the value of these is in the billions of dollars.

[00:23:51] Tim Dosch: Yeah.

[00:23:51] Tom Dosch: And so there is the argument of, well, a lot of times they’re receiving some kind of tax abatement or some kind of an incentive to come to an area. But I think you also need to look at it and say, okay, but that’s going to burn off. So maybe there is some kind of a tax incentive or abatement up front, but then that’s going to burn off over time and there’s still going to be an enormous development there at this data center. The averages are these are worth, you know, at least 3x the normal commercial development of the same magnitude because of just the value that they have. And I think that there’s a lot of opportunity that we’ll continue to see, you know, and we’ll see what happens if we do take these more into space and you see less and less people even trying to do them here, just because if you can actually do them in space and the cost, although expensive, starts to come down because they can operate so efficiently and the, and the power is so inexpensive, then maybe this doesn’t happen. But right now, I think a lot of these big data center companies they’d be willing to do more for the local economies to get these data centers built. And so instead of looking at, we just need to cause moratoriums, I think you should be looking at, you know, how can these data centers come and almost incentivize these local economies to want to allow them to come in and build these, you know, needed data centers?

[00:25:01] Tim Dosch: Yeah, I think one of the things that’s just a misconception is this thought that we can,  we’re in control of AI and how fast it advances and this economic innovation that we can kind of, you know, put a lid on it and, you know, regulate it and decide, you know, where it goes and how it works. And you’re talking about something so powerful and so valuable that I think if the US and Europe makes it so difficult to develop in our countries, you’re gonna see places like Argentina, which have already just said, hey, we’re wide open to this. You know, we’re gonna help AI companies, we’re gonna help with infrastructure. You can build as many data centers as you want in Patagonia. I mean, so I think you’re gonna have like, you know, El Salvador, you know, saying the same thing. So you’re going to have like these other places who are like, you know what, come to us. And I think you could see some pretty interesting things happen in the next 5 to 10 years geopolitically, is, you know, the power dynamics could change because this will be developed. It’s going to have a lot of economic value, and it’s going to go to where there’s the most freedom and the most opportunity. And so it just reminds me of what you’ve seen happen in Europe where they’ve just found this downward trajectory because they’ve so overregulated things. and try to control and limit things. And all it does is it just, the money leaves, you know, the billionaires leave, the millionaires leave, the entrepreneurs leave, the technology doesn’t get developed. You just stagnate and, you end up making things much, much worse for the citizens of those countries.

[00:26:25] Tom Dosch: It’s interesting. That’s why Europe has been so concerned when Trump and the administration basically said, you know, to Anthropic, like, you have to shut your model down to foreign nationals because those other countries were counting on all these advancements that the US has in these labs that are developing models like OpenAI. And I mean, if you think about it, the most advanced AI is coming out of the US, which is really cool.

[00:26:47] Tim Dosch: Yeah.

[00:26:47] Tom Dosch: You know, that it is. It’s Anthropic, it’s OpenAI. But when he did that, they kind of realized, oh man, like if they’re not just going to let us have their frontier models, what are we going to do? Because they haven’t invested in it. They’re either trying to get it from us or they’re trying to get it from China. And it really is the US and China that are in this race to see who’s going to get it. And so I think what I hope for our audience is if you’re falling into the trap of just the overall narrative, which is just so negative against data centers, and I mean, the last stat I heard was it was 70% of people are against data centers, but I wouldn’t be surprised if we’re up at like 90% now because it almost seems like everyone I talk to is just against it. It’s really worth thinking a little bit deeper about it, like the way we’re trying to explain it and talk about it, that this is the backbone of the modern economy. You can’t have a lot of the things you’re taking for granted from a digital perspective, you can’t have these advancements that we’re enjoying and that we’re getting to benefit from without power and data centers. It’s so important.

[00:27:41] Tim Dosch: Yeah.

[00:27:42] Tom Dosch: This will be really critical to see what happens from a regulation standpoint with this. Texas has continued to be overall pro-data center and just pro-AI development, which is really helping our economy. And it’s brought Elon Musk here in a big way now a couple of times. And so I’m hoping that continues because the modern economy is the AI economy now, and the requirement of data computing and processing is actually now becoming the limiting factor in the advancement of AI.

[00:28:09] Tim Dosch: Just looking at the stats of, you said 70% against it or whatever it is, I think it’s pretty even, isn’t it, across right and left? It’s not like it’s just the left. I know there’s some left-leaning politicians who are against it, but I think even looking at more conservative Republican voters tend to be maybe as against it as Democrats. Is that accurate?

[00:28:29] Tom Dosch: That was my understanding. I haven’t looked at the numbers on that, but even just what you’re seeing, you know, in the media and conversations we’re having with, you know, people that would identify as either side, pretty equally against it. It’s interesting because I’m not a big conspiracy person, but I have heard there’s been conjecture that like a lot of this could be coming out of China, just a lot of the constant messaging that’s so anti-data center, which it would make a lot of sense because like you said, it’s, it seems like it’s onset pretty quickly.

[00:28:57] Tim Dosch: Yeah.

[00:28:57] Tom Dosch: You look at the race we’re in with China right now related to AI, and then you look at the moves they’re making, you know, where they’re just so pro developing power and getting these data centers built as fast as they possibly can. And you look at some of their recent models that have come out, some of their frontier large language models, they’re coming out and they’re really good. They’re not quite as good. They wouldn’t be considered to meet the same benchmarks as maybe like the latest Claude or the latest ChatGPT model, but they, in a lot of cases, are getting really close. And even like Elon Musk is saying, he thinks that, you know, by early next year, and some people think potentially by the end of this year, China’s going to have models similar to like the most advanced models that have come out here in the U.S. that our government has said these are too powerful to be in public. And the thought is like, China’s going to have those by the end of the year.

[00:29:48] Tim Dosch: Yeah, it’s interesting because they’re also, there’s been, they’ve been pretty open about 2027 is the year they reunify with Taiwan. You know, which is very interesting from a, just a chip standpoint, since Taiwan’s such a big supplier of chips. I know that we’re trying to onshore all that, and there’s a lot of these huge, you know, chip manufacturing plants that are being developed in the United States, but the timing is probably not quite there. So if they’re able to acquire Taiwan one way or another and start to limit that and also get ahead of us from an AI standpoint and a power standpoint, that’s not going to be great. for the United States.

[00:30:24] Tom Dosch: Yeah. Well, and I think what you said earlier is important. Like, we’re not saying that data centers should be able to be built anywhere and everywhere, but I think that they’re probably in pretty much every city. There’s land that would be well positioned for a data center if obviously the power’s there. But, you know, they’re in,  it’s normally going to go on land that’s zoned for industrial. So it’s probably not going on a tract, you know, that’s like right next to someone’s backyard or right next to a subdivision or, you know, the kind of what you just picture. We were talking about this the other day. You picture like a nice community off a golf course and then there’s like some big data center. You know, it’s like, that’s not really how most of these are setting up. I mean, a lot of them, they’re building them almost like in the middle of nowhere in these like really, really rural areas where there is power capacity and they’re popping up and creating pretty significant economic value for that community. And then in other cases, they’re building them, you know, in areas of Houston or Dallas or, you know, suburban areas outside of those. where there was, again, just strong power availability, but more industrial land. 

[00:31:26] Tim Dosch: Yeah. What we’ve seen in our work on them is a lot of these, like you’re saying, very far out rural areas where land might be 5,000 to 7,000-acre, you know, really cheap land, you know, basically farmland. A lot of times people have owned it for 100 years or for multiple generations. And so you have these data center developers who can pay, you know, maybe $20,000 an acre, you know, $40,000 an acre for land that’s, $5,000 to $7,000 an acre, you know, that typically doesn’t even trade. And it’s been funny because one of the big things we’ll hear people say when we’re talking to them is, well, I’ll sell, but not to a data center. And it’s almost like it doesn’t matter what the price is, you know, you,  I could have a farm that’s worth $5,000 an acre and you could offer me $20,000 or $30,000 an acre, but just don’t build a data center on it. You know, you can do anything else.

[00:32:10] Tim Dosch: Yeah.

[00:32:10] Tim Dosch: Which obviously, if you don’t do a data center, it’s worth $5,000 an acre, you know. But, that’s been interesting because In a lot of cases, those are probably more conservative people that you wouldn’t, you know, maybe wouldn’t put in like in the AOC or the Bernie camp, but they’re kind of feeling the same way about it. Yeah.

[00:32:27] Tom Dosch: Well, maybe to maybe to wrap up the episode, I think just realizing that these data centers are infrastructure. I know we said it earlier, but they are infrastructure, just like roads, airports, rail lines. It’s just a modern infrastructure that’s important for our economy. And so instead of looking at it as, you know, data centers are bad, you know, they’re only negative. It’s kind of like every argument for them, you could create an argument against them. But instead of looking at it that way, it’s saying, how can we actually, how can we figure out a way that we can have data centers allowing us to invest in the grid, generating more power? They’re getting more efficient in their water consumption. Like we said earlier, it’s already well below things like almonds, you know, that we, we don’t even, we’re not even worried about it. So like, what arguments are we listening to against them? And are we actually realizing the importance of them as infrastructure for our modern economy? I hope that’s what our audience can take away today, and hopefully we start to see a shift away from just everyone’s against data centers to thinking a little bit more deeply about the positive side of data centers and how we’re going to be able to use them and the importance of them in our economy.

[00:33:33] Tim Dosch: Well, it’s a great conversation, Tom, and it’s going to be interesting to see the way it plays out. I think the next probably 18 to 24 months, we’ll see this just continue to be a big national conversation and local conversation is there’s a lot of these that get discussed and, you know, different proposals, you know, that are presented on them. So it’ll be interesting to see how it plays out.

[00:33:53] Tom Dosch: Yeah, I definitely think that’s going to be the case. Well, thanks, Tim. This is a good one. Looking forward to having you back on. And thank you to our audience for listening. Definitely reach out, connect with us on LinkedIn, where you can follow Texas Land Guys and you can get clips of the episodes and shows. and interact with us. And then also listen to us on Spotify, Apple, or check us out on YouTube where these episodes are filmed and you can go ahead and watch Tim and I as we discuss these topics. Looking forward to our next episode together.

[00:34:24] Tim Dosch: All right. Thanks, Tom.

[00:34:26] Outro: Thank you for listening to our podcast today. If you have questions about land you own in Texas, send us an email at texaslandguys@dmre.com and follow us on LinkedIn to stay updated.