---
title: "Data Center Leases Are 'Swiss Cheese' — Why Billionaire Developer Steers Clear Of Data Centers"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/270736261.md"
description: "Fernando De Leon, founder of Leon Capital Group, warns against investing in data centers, citing concerns over rapid AI hardware obsolescence and \"Swiss cheese\" leases. Despite the AI-driven demand, he questions why major companies avoid owning data centers. De Leon remains optimistic about commercial real estate, predicting a $4 trillion capital influx and significant price appreciation over the next decade."
datetime: "2025-12-24T14:16:06.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/270736261.md)
  - [en](https://longbridge.com/en/news/270736261.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/270736261.md)
---

# Data Center Leases Are 'Swiss Cheese' — Why Billionaire Developer Steers Clear Of Data Centers

Data centers have become Wall Street darlings, with giants like Blackstone Inc. (NYSE:BX), KKR & Co.. (NYSE:KKR) and Bain Capital pouring billions into the infrastructure powering the AI revolution.

But while most investors are chasing the "hyperscale" dream, Fernando De Leon, founder of Leon Capital Group, is sounding a loud alarm, according to CNBC. 

De Leon, who turned a $100,000 startup into a $10 billion commercial real estate empire, isn't just a skeptic — he's a student of market cycles. From his early days as a Goldman Sachs analyst to predicting the 2008 subprime collapse, de Leon has built his fortune by identifying "fundamentally unsound" euphoria.

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These days, de Leon said, red flags are flying over data centers. 

The bull case for data centers is simple: AI requires massive computing power, which requires massive buildings. But de Leon points to a glaring contradiction in the market. 

"I look at a data center that's $10 billion, right? First of all, there haven't been any exits above, you know, $4 billion or $5 billion, you haven't seen comps, so that worries me," he told CNBC. 

De Leon said the world's largest companies don't want data centers on their balance sheets, and he wonders why. 

"Why doesn't the largest company in the world want to own its own asset?" he said. "The AI business is everything for them today, for the large hyperscalers, and so they're saying ‘No, you build it, you finance it.'"

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De Leon said he's concerned about the rapid obsolescence of AI hardware. If the technology inside the data center becomes outdated in a few years, the value of the real estate diminishes quickly. 

He describes the 15- to 20-year leases developers rely on as "Swiss cheese" leases — agreements that may look solid but are actually full of holes that could allow tech giants to walk away if the infrastructure becomes inefficient. 

Despite his caution on data centers, De Leon is bullish on the broader commercial real estate market and predicts a massive capital influx. 

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As wealth firms, family offices and sovereign wealth funds increase their real estate allocations from 3% to 6%, De Leon said he expects an additional $4 trillion chasing a finite supply of property. 

"When that happens, you see an oversupply of capital, you'll see price appreciation for fundamentally sound real estate assets," he told CNBC. "And so I think the story of the next 10 years will be that the real estate capital markets will grow tenfold." 

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_**Image: Shutterstock**_

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