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Data centre opportunities for industrials

  • United Kingdom
  • Data centers
  • Diversified industrials

19-07-2017

The growth in the number and nature of IT applications used by businesses and individuals alike and the proliferation of devices on which those applications can be used (notably smart phones) has driven the need for secure locations in which to store the masses of data produced by that computer usage. Industrial land and buildings which are surplus to operational requirements can often be adapted into data centres, a sector which scarcely existed 15 years ago, presenting exciting opportunities to industrial and manufacturing landowners. With end users paying potentially millions a year in rents and operaftors looking for lease terms of 20 years upwards, data centres offer a viable, and fundable alternative use to industrial land.

To put the demand in context, the biggest traditional users of data centres were financial services, e-commerce, telecommunications and technology businesses. Predicted growth is coming from uses however that we hadn’t even thought of ten years ago, such as:

  • social media, Twitter, Facebook, Snapchat
  • content” providers – such as Netflix, iPlayer and YouTube
  • wireless and mobile communications
  • file–sharing
  • on-line banking
  • cloud computing and software–as–a-service
  • driverless vehicles

If growth continues in line with current demand, the world will be using 122 million servers in 2020, up from just 18 million in 2008. That’s an increase of 700%.

So what does it take to create a data centre? As a general rule the location of data centres is determined by a number of factors, such as the supply of power, fibre connectivity, physical security and flood avoidance. In the UK, the large majority of data centres are located within, or within about 40 kilometres of, the M25. This is due, historically, to the diversity of communication providers within the greater London area and the proximity to financial markets. That geographical dependency on the South East is, though, rapidly changing – in part due to the more varied nature of the end users needing data centre services but also the more ready availability of energy and connectivity further afield.

In relation to the building itself, the key features are:

  • Freehold or long leasehold site (or where rack rented at an industrial rent, a landlord that is receptive to the grant of an option for reversionary leases of up to, along with the remaining term, 50 years)
  • Minimum gross internal area of 150,000 square feet, ideally on a site with hard standing area around part of the building, and with capacity to install a perimeter fence
  • Existing power supply (ideally from dual and diverse sources) with a capacity of 5MW but with sufficient capacity in the local network to increase to 20MW at modest cost
  • Existing fibre connectivity to the site (ideally via multiple carriers)
  • Low risk from a flooding perspective
  • Not located under a flight path
  • Not located next to a facility which has obligations under the Control of Major Accident Hazards Regulations 2015 (i.e., a potentially contaminated site). Whilst not stopping a building’s conversion to data centre use, overcoming the perceptions that many end users might have of this could be difficult!

If your property meets these requirements and is presently under-utilised or surplus to your needs, you could be sitting on an opportunity you never knew existed.

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