Data Centres
As the digital world continues to grow, data centres have become one of the most sought-after asset classes in commercial property. These facilities form the backbone of the internet, cloud services and digital storage, offering investors a big opportunity to capitalise on the surging demand for data infrastructure.
What are data centres?
Data centres are specialised facilities designed to house computer systems, servers and networking equipment that support the digital economy. These facilities provide secure and climate-controlled environments where businesses store and manage their data.
Data centre properties come in various forms, including:
- Colocation centres: Shared spaces rented by multiple businesses for hosting their servers.
- Hyperscale data centres: Massive facilities owned by tech giants like Amazon, Microsoft and Google.
- Edge data centres: Smaller facilities located closer to end-users to reduce latency.
These facilities are vital for industries such as e-commerce, telecommunications, financial services and gaming, ensuring they remain operational and efficient in a digital economy.
Recent trends in
data centres
The demand for data centres has skyrocketed over the past decade. This growth is fuelled by the rapid digital transformation of businesses, the rise of remote working and the increasing adoption of cloud computing.
In Australia, investment in data centres has grown significantly, with major metropolitan areas like Sydney, Melbourne, and Brisbane serving as key hubs. International tech giants and local operators are expanding their presence, while smaller, regional centres are also emerging to serve growing digital needs in remote areas.
Another trend is the focus on sustainability. Data centres are notoriously energy-intensive, but operators are investing heavily in renewable energy sources and energy-efficient designs to meet environmental targets and reduce operating costs.
What is the future for
data centres?
Data centres are poised for exponential growth as the world becomes increasingly digitised. The global rollout of 5G technology, the expansion of artificial intelligence and the explosion of data-driven applications are all contributing to the demand for these facilities.
Australia, in particular, is emerging as a hub for data centres due to its stable economy, robust regulatory environment and proximity to Asia-Pacific markets. Experts predict an increase in hyperscale developments, supported by large-scale investments from global tech companies.
Why buy a
data centre property?
Data centres typically provide stable, long-term rental income, as tenants – often large corporations or tech companies – sign multi-year leases. The high cost of relocating IT infrastructure means tenants are less likely to vacate, ensuring reliable occupancy rates.
Another advantage is the sector’s resilience to economic downturns. Data centres are essential for business continuity, making them less vulnerable to market fluctuations. Investors can also benefit from the increasing adoption of edge computing and the expansion of regional facilities, which offer new opportunities for growth.
But while data centres offer many advantages, they come with risks. High energy consumption can lead to significant operational costs, particularly in regions without access to affordable energy. Additionally, the sector’s rapid evolution means that older facilities may become obsolete without regular upgrades.
Key factors to consider when
buying a data centre
Investing in data centres requires a strategic approach. Location is critical; properties near key infrastructure such as power grids, fibre optic networks and urban centres are particularly valuable.
The quality of the facility itself is another important factor. Modern centres with efficient cooling systems, high security and scalable space are more attractive to tenants and command higher rents.
Understanding tenant quality is equally important. Tenants in the data centre sector typically include tech companies, cloud providers and large enterprises, all of which have specific needs for security, uptime and compliance.
Why buy with
Costi Cohen?
Buying a data centre property without professional guidance can be complex and risky. From understanding tenant agreements to assessing the technical infrastructure of the facility, there are many variables that can impact your investment.
Without the right expertise, you risk overpaying or buying a property that doesn’t meet future market demands.
Costi Cohen simplifies the process of investing in data centres, offering expert insights and tailored advice. Here’s how we help:
- Market expertise: We understand the latest trends in the data centre sector, helping you target properties with strong growth potential.
- Thorough due diligence: From tenant reviews to facility audits, we ensure every aspect of your investment is thoroughly evaluated.
- Negotiation power: Our industry connections enable us to secure the best terms and maximise your return on investment.
With Costi Cohen’s guidance, you can invest in data centres with confidence, knowing every detail is taken care of.
How to finance an
industrial property investment
Financing a data centre often involves commercial property loans tailored to this specialised asset class. Lenders typically require a deposit of 30-40%, with interest rates and terms dependent on the property’s location, tenant profile and lease terms.
Given the complexity of data centre financing, working with a finance broker is highly recommended. A broker can help you secure competitive rates and structure a loan that suits your investment strategy.
At Costi Cohen, we have established relationships with finance experts who specialise in commercial property. We can connect you with the right professionals to streamline the financing process and set you up for success.
Explore some of our
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Costi Cohen — Australia’s premier commercial real estate consultants
Whether you’re a seasoned investor or new to the market, our expertise will pave the way for your success in commercial real estate. We’ve looked after more than 250 commercial properties and are prepared to help you discover your next investment opportunity.
No matter your timeline, budget or preferred location, the expert team at Costi Cohen can help you find a commercial property that aligns with your needs. We invite you to get in touch with our team for a consultation today.
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