Structuring Data Centers for Flexibility: Using the Condominium Form of Ownership | Winstead PC
As the demand for data centers continues to accelerate—driven by artificial intelligence, cloud computing, and energy-intensive digital infrastructure—developers are increasingly searching for flexible, efficient structures to plan, finance, and operate these complex facilities. Traditional regulatory platting can impose rigid boundaries, delay financing, and limit adaptability as the project evolves.
A growing number of developers are finding a more nimble alternative in the condominium form of ownership.
Beyond Residential: A Commercial Tool for Project Flexibility
Although commonly associated with residential projects, the condominium framework is fundamentally a method of dividing property into separately owned and financeable units. Under the Texas Uniform Condominium Act and similar statutes nationwide, a “unit” may include not only a portion of a building but also a discrete land area within a larger site.
This flexibility allows a developer to structure a single project into multiple, separately financeable components—each capable of distinct ownership, leasing, and maintenance arrangements—without the time and complexity of a formal subdivision process.
Accelerating Development Through Easier Project Segmentation
In the data center context, this flexibility can be decisive. Large-scale data campuses often include multiple buildings of varying size, configuration, and use, along with specialized infrastructure for power, cooling, and connectivity. When projects are divided using a traditional plat, later adjustments to building footprints or shared systems may require time-consuming regulatory replats or overlapping easements.
By contrast, using a condominium declaration to define site-based units enables the developer to align ownership boundaries precisely with the operational layout. This can dramatically reduce the time required to create financeable parcels—often measured in weeks rather than months—and allows modifications to be made through simple amendments rather than new plats.
Facilitating Separate Financing and Ownership Structures
One of the most powerful advantages of the condominium form is its ability to support separate financing or investment in different project components. Each unit can be encumbered by its own mortgage, leased to a separate operator, or sold to a strategic partner—while the shared infrastructure (roads, utilities, and power) remains under the control of the condominium association.
This structure not only broadens financing opportunities but also reduces interdependence among investors and lenders, which can be critical in projects with phased construction or diverse ownership.
Addressing Shared Power and Operations
Most data centers depend on complex power delivery systems, often combining shared generation or distribution facilities with dedicated equipment for each building. The condominium regime accommodates this seamlessly. Shared infrastructure can be designated as common elements, with operating costs allocated proportionally through the association; alternatively, a limited common element or “power unit” can be established to handle utility management, billing, and maintenance for multiple users.
This approach avoids the patchwork of easements and operating agreements often required in non-condominium settings, simplifying both documentation and long-term administration.
Streamlining Administration for Commercial Projects
Most condominium statutes allow certain statutory simplifications for commercial-only projects, such as the ability to waive association-provided property insurance for individual units. Each owner or tenant may instead insure its own component, aligning with how data center assets are typically managed and insured.
In addition, the governing documents can be tailored to assign operational responsibility, allocate costs, and provide dispute resolution procedures that reflect the commercial realities of multi-tenant or multi-owner campuses.
A Practical Tool for Complex Infrastructure Projects
For developers managing projects with multiple buildings, shared on-site power, diverse investors, or staggered development timelines, the condominium structure offers a practical, legally sound framework. The condominium structure can often provide greater flexibility than traditional platting, accelerate financing, and simplify governance across ownership lines—all while maintaining the integrity and coherence of the overall development.
