[nixgeek]

It’s unusual to buy the land and take a gamble on its utility, at least whenever datacenter construction is involved. Purchasing parties are risk averse to this exact scenario and work hard to craft contracts that reduce risk.

Often the choices are —

1. Buy land at $/acre that reflects very little premium, based on a short feasibility study, but without any ultimate contingency that permitting will occur. This is your example. But problematically all permitting applications are typically public record, so when you fail, the land can’t be sold on to someone else as if that didn’t happen, any sophisticated buyer will know the exact issues the city/county had with your usage. Land often transacts onward at firesale prices under these circumstances.

2. $/acre for land is bid upon at a substantial premium reflecting the future value as a datacenter, it remains under contract for potentially years pending outcome of approvals, then it transacts. Permitting being denied usually results in either no money changing hands or a small termination fee reflecting the carrying cost of the land during that period. If permitting works out the seller of land walks away very happy as the $/acre was extremely lucrative.

[edmundsauto]

The second option also incentivizes the seller, who is often a local real estate magnate, to pressure local officials to issue the permits.

[dv_dt]

both options incentivizes the buyer to also lobby local officials

[dnnddidiej]

2 seems good as the seller can still make money from the land in the meantime. It does make it unsellable to anyone else in that time though.

[voakbasda]

I would not be willing to let the seller use the land under contract to avoid the risk of something happening that devalues or disqualifies it for its future intended purpose.

[LtWorf]

If you are microsoft, you know you will get the permit.

[redanddead]

No you don’t. The overall risk is baked into the strategy, but any individual plan is always a toss up, and they have insurance policies for if one or all fail

[nixgeek]

That’s not true, most hyperscalers and their datacenter building partners use Option 2.