Powered shell and triple-net data centers in Opportunity Zones

A powered shell is a data center building in which the landlord delivers the land, the structure and utility power to the site, and the tenant installs the mechanical, electrical and IT systems. Leases are usually long and triple-net in style, meaning the tenant pays rent plus taxes, insurance and maintenance. A build-to-suit is a similar building designed for one named user. These are common industry terms, not legal definitions.

The split of costs is lopsided. JLL forecasts an average global shell-and-core cost of $11.3 million per MW in 2026 and says tenant AI fit-out can cost up to about $25 million per MW.¹⁵ In a powered shell, the landlord owns the smaller, longer-lived pool, and the tenant owns the larger, shorter-lived one.

They say a bare triple-net lease is not an active trade or business. A Qualified Opportunity Zone Business (QOZB) is a trade or business in which substantially all (70%) of the tangible property is Opportunity Zone business property and which earns at least 50% of its gross income from the active conduct of that business, among other tests (§1400Z-2(d)(3)).¹ In paraphrase, the regulations define trade or business by reference to §162; for purposes of the QOZB test, they treat the ownership and operation (including leasing) of real property used in a trade or business as the active conduct of a trade or business; and they then provide that merely entering into a triple-net lease with respect to real property the taxpayer owns is not the active conduct of a trade or business by that taxpayer (Treas. Reg. §1.1400Z2(d)-1(d)(5)(ii)(B)). Check the exact wording in the eCFR text before quoting it.² The rule is part of the final regulations published as T.D. 9889.^3,4

The Opportunity Zone regulations do not define triple-net lease. When the rule was first proposed in 2019, Tax Notes reported a Treasury official's comment that merely entering into a triple-net lease is not enough for the active-business test, but that a triple-net lease is not disqualifying by itself if the owner's activities otherwise rise to a §162 trade or business; that is an informal remark, not authority.⁷ Practitioners often look to IRS Notice 2019-07, the rental real estate safe harbor under §199A, which describes a triple-net lease as one in which the tenant pays taxes, fees and insurance and is responsible for maintenance, in addition to rent and utilities.³ Baker Tilly notes that definitions differ across tax programs, so labels in a lease are not decisive; the economic substance is.⁸

Holding the building directly in the QOF rather than through a QOZB does not obviously avoid the issue. The triple-net sentence is written for the QOZB test, but property a QOF holds directly must still be used in a §162 trade or business of the fund, and whether a bare triple-net lease meets that standard is itself uncertain. Treat that route as uncertain and confirm with tax counsel.

They show that the answer turns on whether the landlord's own people actively run something beyond the triple-net space. Two examples in the final regulations carry most of the weight.^5,6

Commentators read the second example as allowing some triple-net space inside an otherwise actively operated property.^5,6 What the examples do not resolve is where the line falls between the two, how much operating activity is enough, and whether services performed by contractors count the same as services by the landlord's employees. The examples refer to employees, so a structure that relies on a third-party manager should document who does the work and under whose direction.

Because it closely matches the regulation's non-active example: one tenant, the whole building, the tenant pays every cost and the tenant runs the mechanical and electrical plant. Dentons' April 2026 commentary on data center projects highlights exactly this issue for hyperscaler deals.⁹ No ruling, notice or regulation addresses data center leases specifically.

Passing the 70% tangible property test does not cure it. A powered shell bought new and placed in service by the QOZB can be qualifying property, but the QOZB still needs an active trade or business and at least 50% of gross income from actively conducting it.¹ Rent from a bare triple-net lease puts both at risk. Practitioner commentary also notes that landlord-owned shell, power, cooling and backup generation are on firmer ground as qualifying property than tenant servers, which leaves the active business question as the main issue.¹⁰

By giving the QOZB real, recurring operating responsibilities and documenting them. The points below are practical considerations drawn from the regulation's examples and commentary. None is a safe harbor, and tax counsel should review the specific facts.^9,10

1. 1.Landlord-operated critical infrastructure. The QOZB owns and operates the on-site substation, medium-voltage distribution, central cooling plant or water systems, with its own staff on site.
2. 2.A service-inclusive lease. A modified-gross lease in which the landlord keeps responsibility for structure, roof, building systems, security and insurance looks less like the triple-net pattern. Substance controls, so the landlord must actually perform those duties.
3. 3.Campus-level operations. On a multi-building campus, the QOZB can run shared roads, perimeter security, fiber entrance facilities and utility systems for every building and tenant.
4. 4.Turnkey delivery. The QOZB builds and operates the mechanical and electrical plant and leases finished capacity. This takes more capital but adds qualifying property and services.
5. 5.Mixed tenancy. Leasing part of the campus to colocation or smaller users that the QOZB serves directly follows the logic of the second regulatory example.
6. 6.Annual documentation. Keep staffing records, service logs, budgets and contracts that show the QOZB's operating role each year, and track the gross income safe harbors.
7. 7.Disclosure. Investors should see a plain description of the triple-net risk and of counsel's analysis before they invest.

The economics change with each step. More landlord responsibility usually means higher rent, more staff and more capital at risk. Lease terms for data centers are compared in Data center lease structures in Opportunity Zones, and day-to-day compliance in Managing a data center QOZB.

• Tenant property. Equipment and improvements the tenant pays for are treated as the tenant's purchased property, so they sit outside the landlord QOZB's 70% test.¹² Reversion of tenant improvements at lease end should be reviewed separately.
• Ground leases. Land leased from an unrelated party on market terms can count as qualifying leased property. Related-party leases cannot prepay more than 12 months of rent and face added conditions for previously used property.¹¹
• Related parties. A hyperscaler that owns more than 20% of the fund or QOZB is generally a related party under §1400Z-2(e)(2), and property bought from a related party does not qualify.¹ See Related-party rules in Opportunity Zone deals.
• Original use and timing. A new shell is original use. Construction cash can be held under the 31-month working capital safe harbor; see The Opportunity Zone working capital safe harbor.
• Pending guidance. Notice 2026-55 requests comments on issues under §1400Z-2, including rules for operating businesses, with comments due November 23, 2026. Treasury could address leasing in later rules, but nothing has been proposed on data center leases.¹⁶

For the equipment side of the same building, see Servers, equipment and the Opportunity Zone rules.

Two kinds: reports about how hyperscalers use the program, and bills that would change it. Microsoft, Meta and Amazon told WIRED in October 2026 that they do not use the Opportunity Zone program for their data center investments; Google did not respond.¹³ That is consistent with Opportunity Zone capital coming from developers and investors who own the building, not from the tenant.

On September 16, 2026, Sen. Josh Hawley introduced the No Tax Breaks for Data Centers Act, which would exclude data centers from Opportunity Zone benefits, and was referred to the Senate Finance Committee. Two House members introduced a separate bill to bar data centers from expanded incentives including Opportunity Zone benefits and 100% bonus depreciation, and Sen. Ron Wyden released a framework with a similar aim.^14,17 These are proposals, not law. Model the deal on current rules and disclose the legislative risk.