Bank Street Industry Insight – Q&A with Richard Lukaj

Data Center transaction activity is accelerating as companies and financial sponsors look to capitalize on the extraordinary demand driven by generative AI.  Availability of utility power has emerged as a key variable for hyperscale data center projects, which is driving opportunities for collaboration between data center operators and power generation companies.  Bank Street Senior Managing Director, Richard Lukaj, walks us through ECP’s announced partnership with KKR and CyrusOne as well as other important dynamics in the data center market.

BSII: What did this transaction achieve for Bank Street’s client, Energy Capital Partners (ECP)?

RSL: This pivotal transaction (1) enabled ECP to further leverage their capital into the digital infrastructure arena, utilizing their experience and presence across the energy sector, (2) took advantage of Calpine’s – now Constellation Energy’s – significant natural gas power generation capacity with near term availability in the ERCOT region of Texas, and (3) utilized ample available land adjacent to the Thad Hill Energy Center.

These pillars were consistent with the basis for strategic partnership between ECP and KKR announced last year, which also enlisted CyrusOne, a leading data center operator and KKR portfolio company, in the joint venture.  Historically, power generation companies have simply sold electricity to data center operators on a retail or wholesale basis, but this partnership enabled ECP to achieve owner’s economics from the power generation plus participation in the value that is created from the new data center campus with highest credit quality hyperscale customers.

BSII: How does is ECP–KKR partnership positioned to differentiate itself in meeting hyperscale data center demand?

RSL: The ECP-KKR partnership provides uniquely compelling attributes to potential hyperscale customers because it addresses substantially all their most important requirements for new data center deployments.  The Bosque County facility is located next to the Thad Hill Energy Center with 400 MW of existing capacity committed to the partnership, so it affords speed-to-power along with first class data center operations and the ability to scale.  Importantly, the partnership combines the proven operational capabilities of Constellation Energy and CyrusOne with the financial resources of two of the world’s largest infrastructure funds.

BSII: Why was Dallas the first market for the $50 billion partnership between ECP and KKR?

RSL:  Dallas was a natural starting point as the market is the third largest and among the fastest growing data center markets in the U.S. with more than 600 MW of installed capacity at year-end 2025.  As AI Inference becomes an increasingly large percentage of data center demand, we expect major population centers like Dallas that have land, power and robust fiber network connectivity to be increasingly attractive for hyperscale and enterprise data centers. It’s worth noting that JLL recently predicted in its North America Data Center Report that Texas will overtake Virginia as the world’s largest data center market by 2030.

BSII: What do you see as the most important drivers of transaction activity in the data center sector in 2026?

RSL: 2025 set a new record for M&A activity in the global data center market with a total of $69 billion in transaction volume compared to $61 billion in 2024. We have seen remarkable momentum going into 2026, which we expect to be another exceptional, if not another record year.  Financial investors continue to actively pursue investments in the data center category, although with a greater degree of selectivity and a focus on proven operators with long duration, high-credit-quality customers.  Strategics are also looking to augment capacity in key geographies, ensuring that they are able to address the needs of hyperscalers and other large customers.  The recent transaction involving CPP and Equinix’s partnership to acquire atNorth for $4 billion is a good example of this robust appetite.

BSII: Are there data center segments beyond hyperscale in which you are seeing interest from financial or strategic buyers?

RSL: Yes, the enterprise data center category is just at the early innings of becoming a significant beneficiary of AI inference workloads being deployed in closer proximity to population centers, where these companies often have assets in place with capacity to accommodate rapid deployment.  These companies are also benefiting from their market position as solution providers to enterprises that need partners to address a wide range of use cases, including wholesale and retail colocation, ai inference use cases (most notably protecting enterprise data sovereignty), private cloud and on-ramps to the public cloud.

Network-centric data centers – carrier hotels and comparable assets – are also seeing accelerating demand as AI inference requires dense connectivity between and among carriers and ISPs, which is available and growing the importance of these types of facilities.

BSII: Can you elaborate on fiber network connectivity as an important component of the AI-driven data center market?

RSL: Fiber network operators are among the major first-derivative beneficiaries of the data center boom as the hyperscalers require enormous amounts of dark fiber infrastructure for data center-to-data center connectivity within metro areas and on an inter-city basis.  As an example of the opportunity, last year we represented Gigabit Fiber, which operates 500 route miles of conduit with high-count fiber infrastructure connecting more than 50 data centers across Dallas-Fort Worth, in a transaction that brought in Blue Owl as a financial partner to fund the company’s future expansion.  Additionally, we have worked with folks like SummitIG, IIG, South Reach, Arcadian and others experiencing similar build drivers for their platforms.