Newsletter
Infrastructure Of The Cloud
Fifth Wall Newsletter: https://mailchi.mp/fifthwall/what-data-center-growth-means-for-real-estate
Data centers are the infrastructure where the internet lives. It's where the world's photos, apps, and emails are backed up. The sector's strong growth sets it apart from other CRE sectors, the Wall Street Journal reports.
- Blackstone grew its data center development pipeline to more than $15 billion from $1 billion in two years.
- Tech giants have leased more than 2.3 gigawatts of capacity in North American data centers this year (exceeding last year's record).
- New capacity in the works totals to 15 gigawatts, enough to power 4 million homes.
As a real estate asset, data centers stand out. There's strong growth and tenants are willing to pay more, even in the midst of high interest rates.
But here's the major obstacle: These warehouses need significant electricity for high-powered servers and cooling systems. Many data center firms are looking into developing their own renewable power sources in order to meet the energy demands.
Big picture: Could empty offices get in on the data center growth? Just take for example One Wilshire—it went from law offices in the '60s to one the most important data centers in the world. Even in a remote world, real estate location matters. "The value of well located, urban infill real estate is unquestioned. Even if they're not to be offices, there's an infinite number of new use cases," Brendan Wallace, co-founder and managing partner at Fifth Wall writes on LinkedIn this week.
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