Newsletter · · Ashutosh Agarwal

Warehouse Rents Turn Up as Oracle Reaches for Force Majeure on Project Jupiter - Powering AI Infrastructure - Week of October 1, 2026

The Powering AI Infrastructure weekly for the week of October 1, 2026, synthesizing REIT, credit, and power podcasts. A large private warehouse owner raised its rent forecast for the first time in 13 quarters, Oracle filed a force majeure notice on its Project Jupiter Stargate campus, Jim Chanos and Steve Eisman attacked data center returns and accounting, and Morgan Stanley said power equipment is sold out into the 2030s.

Powering AI Infrastructure

Week of October 1, 2026: Warehouse Rents Turn Up as Oracle Reaches for Force Majeure on Project Jupiter

For three years, warehouses were the boring half of infrastructure real estate. Data centers got the attention, and warehouses got a supply hangover. This week the two swapped scripts. The people who own warehouses sounded more confident than they have since 2022. At the same time, the biggest AI data center story of the week was a tenant looking for a legal way to delay paying rent.

TL;DR

  • Industrial rents are turning. A large private warehouse owner raised its rent forecast for the first time in 13 quarters and expects about 5% rent growth next year. Phoenix vacancy in one big portfolio fell from 14% to 2%.
  • Oracle tested the data center lease. Oracle filed a force majeure notice on Project Jupiter, its 2.4-gigawatt Stargate campus in New Mexico. The project carries about $18B of bank debt, reportedly trading below 90 cents on the dollar. The key question for every landlord is who absorbs the delay.
  • Power equipment is sold out into the 2030s. Morgan Stanley says GE Vernova is now in talks for 2031–2032 turbine slots and prices are still rising. Bloom Energy says data centers now treat on-site power as permanent, not a stopgap until the grid arrives.

What's new

1. The first warehouse rent upgrade in 13 quarters. On Front & Center's Episode #85: Reading between the Earnings Calls: REIT Debrief (Sept 25), CenterSquare portfolio managers Rob Goldstein and Patrick Wilson passed on what they heard at a recent industry conference. (Buy-side investors relaying a private operator's internal numbers.)

  • One of the largest privately owned industrial landlords models rents quarter by quarter. For Q3 it raised its rent growth expectations for the first time in 13 quarters.
  • It expects 5% rent growth next year and called it "the cleanest pathway they've seen in quite some time."
  • Phoenix was the release valve for overflow demand from Southern California. In that owner's portfolio, Phoenix vacancy went from 14% to 2%.
  • Southern California vacancy fell 40 basis points in Q2. Leasing rose more than 40% year over year, though from a very low base.
  • Wilson's caveat: Southern California still faces "a minimum of two years of negative mark to markets." In plain English, many leases signed at the peak will renew at lower rents.

Why it matters: this is the clearest sign yet that warehouse rents have bottomed. It comes from an owner's own forecast rather than a broker pitch. Wilson's point that construction costs are up 25% to 40% over four years explains why. Expensive building means less new supply.

"We're entering a period where supply should be muted. And typically when you enter those periods, you have a cycle of outsized growth for real estate broadly." (Rob Goldstein, CenterSquare)

2. Oracle tests how much a data center lease can bend. The week's biggest data center story was a tenant problem, not a landlord problem. On Squawk on the Street's 9AM HOUR: 5% Yields Watch; Tech Titans at Trump-Xi Dinner; Oracle's Data Center "Force" 9/25/26 (Sept 25), CNBC's anchors and reporters explained the structure. (Journalists/pundits.)

  • Blue Owl developed Project Jupiter. According to the CNBC reporter, Blue Owl "had a call with the lenders where they communicated, don't worry, you will get your money back."
  • Oracle is "on the hook for those rent payments over an extended period of time," and its credit default swaps (the cost of insuring its debt) have widened.
  • Oracle's revenue is supposed to double over two years, an extra $60–70B, "only if these projects happen."
  • The landlord side's answer, as one source told the reporter: if Oracle can't stomach it, "someone else will come in." The anchor called it "the anti-dark fiber thesis." Unlike the empty fiber of 2001, the bet is that demand is deep enough to re-let anything.

On Rebel Capitalist News' BREAKING: Oracle May Have Just Signaled The Top In The AI Bubble (Sept 25), George Gammon (pundit) read through the reporting:

  • About 20 banks provided the $18B, and the debt is reportedly trading "below 90 cents on the dollar."
  • The setbacks include a denied permit, local opposition ahead of the midterms, and natural gas pipeline delays.
  • Bloom Energy was supposed to power the campus with fuel cells. Oracle fell 4.4% and Blue Owl 3.7% on the news.
  • Oracle's co-CEO had told analysts on Sept 10 that Jupiter would not affect fiscal 2027 revenue or earnings.

Why it matters: this is the first big test of a question every data center landlord and lender cares about. When the power doesn't arrive, does the tenant, the developer or the bank take the loss? So far the answer seems to be that the tenant keeps paying rent for the full lease term but can push payments back. That protects landlords and lenders. It also means Oracle's balance sheet takes the strain.

3. Jim Chanos says the data center REIT model was never good. On RiskReversal Pod's Jim Chanos & Gary Marcus: Circular AI Financing, The Agentic Economy & Doomsday Scenarios (Sept 25), the short seller (pundit/investor) explained why he has been short data centers since 2022.

"We had looked at the legacy data centers as REITs back in 2022 and got very bearish... based on the absolute horrible economics of building a data center to host, co-locate... They're low single digit to mid single digit pre-tax returns on capital. And this is in a booming business." (Jim Chanos)

  • His charge: data centers "are being marketed as REITs so that you just don't include the depreciation." REIT cash flow measures (FFO and AFFO) add back depreciation. Chanos says that hides a business where "stuff broke... stuff needed to be replaced."
  • On AI: "the AI data center business is primarily an equipment leasing business. I'm buying chips from NVIDIA and I'm renting them to you."
  • On hyperscalers: returns on new capital "peaked in 2024 and have been declining ever since." On the current trend, they fall below the cost of capital "sometime in mid-27, which I don't think the market is prepared for."
  • On Oracle's credit: its CDS is around 225, meaning it borrows at roughly 8%. That is "not prohibitive yet. If it gets into double digits, debt only, then it's prohibitive."
  • He added that Goldman raised its data center spending estimate by 50 gigawatts, or $2.5–3 trillion over five years. That takes the total to $10–12 trillion, about 6% of GDP.

Why it matters: last week a Jefferies analyst argued that Digital Realty's and Equinix's land banks are worth a re-rating. Chanos is the cleanest version of the opposite view: the landlord model earns thin returns even in a boom.

4. CoreWeave: rules move data centers, they don't kill demand. CoreWeave CEO Mike Intrator (operator) gave two interviews on Sept 30. On Squawk on the Street's 9AM HOUR: White House AI Summit Aftermath, PCE Inflation Gauge Holds Steady, CoreWeave CEO "First on CNBC" 9/30/26:

"There has absolutely not been any reduction in orders. I want to be clear that the regulations that are being brought out around data centers, all they are going to do is they're going to relocate the infrastructure."

  • On rising rates: "the margins that we are earning are expanding faster than the rates are going up." He expects that to hold "through 2027 and into early 28."

On TBPN's White House AI Accord, Model Welfare, Ken Griffindor School of Market Wizardry (Sept 30), he addressed the depreciation worry that Chanos raised:

  • CoreWeave's A100s, a 2020-era chip, are contracted out through 2029. That is his rebuttal to the claim that GPUs become worthless within a few years.
  • He called consolidation among neoclouds (GPU-rental clouds) an "inevitability" in a capital-heavy business, "whether the number is going to be 10 or 7, I don't know." One trigger would be power becoming "more dear," which pushes buyers toward the biggest, most reliable providers.

Why it matters: "relocate, not reduce" is the right lens for the local backlash against data centers. It's bad news for landlords whose land sits in hostile counties. It's good news for anyone holding powered land in friendly ones.

5. Power equipment is a seller's market into the 2030s. On Thoughts on the Market's AI Meets the Physical Economy (Sept 25), Morgan Stanley utilities analyst Dave Arcaro (sell-side analyst relaying management commentary from the firm's industrials conference) reported:

  • GE Vernova is "now in conversations to contract turbines for 2031 and 2032." Smaller on-site engine makers are taking reservations into 2029 and 2030.
  • "We haven't seen any changes in bookings or slot reservations for equipment deliveries," despite the headlines about moratoriums.
  • Prices are rising, likely "into the 2030s from here. We would still consider it very much a seller's market."
  • On grid versus on-site power, utilities say "it's all going to go to the grid," while on-site vendors say "nobody wants the grid." His view: it's "a really favorable market... for both sides."

The debate

Bull case: there's too little new supply everywhere, and AI keeps buying.

  • Warehouses: At No Cap by CRE Daily's Five Cycles In: DWS's Todd Henderson on What Comes Next for CRE (Sept 27), Todd Henderson, a 23-year veteran of DWS's real estate business (institutional investor/operator), said private real estate values fell 25% peak to trough. Only the GFC (about 35%) and the S&L crisis were as bad. The cause was "100% the result of a change in the cost of capital," not weak buildings. Industrial "got overbuilt" and needed "about a year pause, maybe 16 month pause." His summary: "the sectors across the board have never been this healthy at the beginning of a new cycle."
  • Data centers: On NPM Interconnections' Episode 213: Dominic Ward | Verne (Sept 29), Verne CEO Dominic Ward (operator) said speculative building, meaning construction without a signed tenant, is largely over: "there's more demand today than there is supply." Verne is raising debt plus equity from Ardian for 250 MW of European capacity by 2030. "The projects that we now develop are all pre-agreed with customers."
  • Hyperscaler spending: On The a16z Show's The $1 Trillion AI Buildout | State of Markets (Sept 30), the a16z hosts (venture investors) put 2026 capex for Alphabet, Amazon, Meta, Microsoft and Oracle at about $780B, up from $416B in 2025, with more than $1T a year from 2027. Microsoft, Google and Amazon hold roughly $1.7T of combined cloud backlog. Their framing: "we should think of it as someone else's order book."
  • On CNBC's Fast Money Yields Spike As Consumer Confidence Drops… And Altman Weighs In On AI Pacing 9/29/26 (Sept 29), Gene Munster of Deepwater Asset Management (pundit) said the Street expects 40% hyperscaler capex growth next year. He thinks "it's probably going to be 60% or better."

Bear case: the money is real, but the returns and the accounting aren't.

  • Chanos (above): low returns on capital, depreciation hidden by REIT accounting, and hyperscaler returns falling below the cost of capital by mid-2027.
  • On The Real Eisman Playbook's The Enron-Era Tricks Are Back in AI: How These Companies Are Hiding Their Debt (Sept 25), Steve Eisman (pundit) went after off-balance-sheet structures. Hyperscalers will spend "something like $700 billion on AI CapEx" this year, "and their cash flow has disappeared."
    • Meta's $27B Louisiana campus sits in a special-purpose vehicle, Beignet Investor LLC. Meta owns only 20%; Blue Owl and Pimco own the rest. Meta has agreed to rent the campus for 20 years and bears the cost of delays and overruns.
    • Ernst & Young flagged the structure as a "critical audit matter" in Meta's 2025 annual report. Eisman: "it doesn't pass the smell test."
    • He also noted that NVIDIA "just recently raised prices by 15%."
  • Oracle's force majeure notice (above) is the bear case in real time. The financing works only as long as the power shows up on schedule.

Where I land: this week's bulls and bears are mostly not arguing about demand. Intrator, Ward and the a16z team all say demand exceeds supply. Chanos and Eisman are arguing about who earns the return and whose balance sheet holds the risk. For REIT investors, that's the right fight. A landlord with a 20-year lease from Meta is a very different business from one leasing to a neocloud at spot prices.

Names in play

  • Prologis (PLD). On his REIT Report show, Prologis (PLD) Analysis | REIT Stock Breakdown (Sept 27), Michael Garza (independent REIT commentator) gave these numbers:
    • Latest-quarter core FFO of $1.50; full-year 2026 guidance raised to $6.07–$6.23.
    • Occupancy guidance of 95–95.75%.
    • At about $140, the stock trades near 23x forward core FFO with roughly a 3% yield and a ~70% payout ratio.
    • He flagged Prologis's push into data center build-to-suits as "a powerful long-term growth driver." His main risk is valuation.
    • Separately, on Tangent's Industrial Real Estate Leasing from 12 Weeks to 1 Day, with Warehub's Founder James Holbrook (Sept 29), Commercial Observer host Edward Cohen cited Prologis's projection of about 200 million square feet of net absorption in 2026, ahead of 180 million square feet of new deliveries. Demand taking up more space than is being built is exactly what the CenterSquare rent data implies.
  • Southern California landlords (e.g., Rexford, REXR). My inference, not a guest's call: CenterSquare's data cuts both ways for a SoCal pure-play. Vacancy is falling and leasing is up 40%. But Wilson expects at least two more years of leases renewing below their peak-era rents. Expect better occupancy before better rent spreads.
  • Digital Realty (DLR) and Equinix (EQIX). Garza rated Equinix 8.5/10 on Equinix (EQIX) Analysis | REIT Stock Breakdown (Sept 27). He cited double-digit recurring revenue growth and a raised full-year outlook. His listed risks: valuation, capital intensity, competition and power. On Digital Realty (DLR) Analysis | REIT Stock Breakdown (Sept 27), using first-quarter 2026 figures, he gave:
    • Revenue of about $1.6B (+16%) and core FFO of $2.04.
    • Full-year guidance raised to $8.00–$8.10.
    • At about $195, roughly 24x forward core FFO with a 2.5% yield.
    • Both stocks therefore trade at premium multiples, and Chanos's critique goes straight at that multiple. If depreciation is a real cost, FFO overstates earning power. The bull rebuttal comes from Ward and Intrator: today's leases are pre-signed and long, which makes the cash flows more bond-like than in 2022.
  • Oracle (ORCL) and Blue Owl (OWL). Not REITs, but they are now the bellwethers for data center lease credit. Watch whether the Jupiter force majeure claim holds, and whether Oracle's CDS moves toward the double-digit borrowing costs Chanos calls "prohibitive."

Read-throughs

On-site power: from stopgap to permanent. On Catalyst with Shayle Kann's The rush for clean, on-site power (Sept 28, labeled partner content, so read it as a sales pitch), Bloom Energy CCO Aman Joshi (operator) argued:

  • "Most of the customers are going to Bloom solution as a permanent power. They're not thinking of it as a bridge."
  • Grid power gets more expensive once you add the wires. Step-up transformers cost $5–10/MWh and high-voltage transmission $20–30/MWh.
  • He made the community argument against big gas turbines. A 1-gigawatt combined-cycle plant emits about 720 pounds of NOx a day, "like having 150,000 new cars on the road." It uses about 4.5 million gallons of water a day, "300,000 showers."
  • His prediction: "Grid will become largely for individuals," with data centers running on their own generation.

Read it next to Jupiter, where Bloom was the planned power source and a gas pipeline delay was one of the setbacks. On-site power solves the grid queue, but it still needs fuel delivered and local permits.

Grid queues are a European problem too. On BBC's Wake Up to Money Gridlocked? (Sept 29), Sam Dimitri of the campaign group Britain Remade (policy advocate) said UK factories and data centers "can face up to 5, 10, 15 year waits for a grid connection." Verne's Ward made the matching point: in Europe, the winners are countries with surplus power, such as the Nordics and France.

Industrial demand is broadening beyond e-commerce. On The Matthews Mentality Podcast's Industrial Real Estate's Best Years Could Still Be Ahead (Sept 29), Michael Brennan (operator) spoke. He co-founded First Industrial Realty Trust and now chairs Brennan Investment Group, which he calls the second-largest privately held industrial owner in the US.

"I've continued to see more customers, data center customers, e-commerce customers, manufacturing customers that take more buildings, lease more buildings... And I think the best news for industrial is yet to come."

  • He said manufacturing absorption now ranks third nationally, driven by "technological innovation," not trade policy.
  • Warehub founder James Holbrook (operator; 17 years, 2,500+ industrial transactions) added a twist on Tangent: "the broader thing being underestimated is actually volatility itself." Tenants increasingly pay for flexibility and inland hubs such as Columbus, Kansas City and Dallas.

Freight: fuel still drives the headline rates. On FTR | State of Freight's Trucking Market Update - Week Beginning September 28, 2026 (Sept 30), FTR VP of Trucking Avery Weiss (industry analyst) reported:

  • Diesel fell 14.7 cents to $6.382 a gallon, the first week in four without a record but still the second-highest weekly average ever. It had risen 93 cents in three weeks.
  • Total spot truck rates were up nearly 42% from a year ago. Excluding fuel, they were up 34%, "still quite strong."
  • By equipment: dry van +46%, reefer +47%, flatbed +42%. Load volume was up nearly 9% year over year.
  • The 30-year mortgage rate hit 7.03%, the highest since January 2025.

For warehouse landlords, the 9% rise in volume is the encouraging part. Fuel accounts for a slice of the rate jump, but even after stripping it out, trucking capacity is tight.

What changed

  • Industrial moved from "bottoming" to "turning." Three weeks ago, the CEO of Blackstone's Link Logistics described flat rents. This week an owner's internal forecast went up for the first time in 13 quarters, and two operators (Brennan, Henderson) independently called the start of a new cycle.
  • The data center argument moved from demand to credit. Last week's bear case was Goldman's issuance math and power physics. This week it was a specific lease (Jupiter), a specific structure (Meta's Beignet vehicle) and a specific credit gauge (Oracle CDS near 225). The question has narrowed to who bears the risk when a project slips.
  • Rates got louder. The 10-year is "playing around with 5%" per CenterSquare, mortgages topped 7%, and CoreWeave's CEO argued about rate hikes rather than cuts. REITs are still positive year to date. Wilson thinks they no longer trade as a pure rate proxy because high rates are holding back new supply.