I have a longer piece for everyone coming out tomorrow, but I was so struck by this comment on data centers at a Bloomberg event today from Blackstone's global co-head of real estate:
She may be right, of course, but it is important to untangle the claims. Ms. McCarthy-Baldwin is saying because we only build when we have a signed lease, there can’t be a bubble.
That ignores at least five important points:
1. Counterparty Risk
A “long-term lease with a high credit tenant” is not the same as risk-free. Hyperscalers and AI firms can cancel, restructure, or sublease when demand softens. Many of these contracts have outs, step-downs, or renewal risks. Telecoms in the 1990s also had creditworthy counterparties ... until they didn’t.