This article is from the Australian Property Journal archive
CALIFORNIA-based digital infrastructure company Equinix has partnered with the $1.3 trillion Prudential Financial-backed PGIM Real Estate to establish a US$575 million joint venture that will develop two data centres in Sydney, at a time of unprecedented demand for cloud services.
PGIM Real Estate will control an 80% equity interest in the joint venture, and Equinix will own the balance.
The hyperscale facilities, to be known as SY9x and SY10x, are expected to provide more than 55 megawatts of power capacity to serve the unique core workload deployment needs of a targeted group of hyperscale companies, which the partners said include the world’s largest cloud service providers.
SY9x is expected to open in the March quarter of 2022.
Structure Research forecasts that hyperscale colocation market in Sydney and Melbourne, in terms of built-out critical MW capacity, will grow at a compound annual growth rate of 22% from 2021 to 2026.
“Australia is set to build out its next wave of capacity, with the hyperscale market expected to grow about double the rate of the retail segment by 2026. There have been unprecedented levels of cloud adoption in the country,” Jabez Tan, head of research, Structure Research said.
Australia’s data centre market is set to grow by 97% over the next three years, as the country leads the Asia Pacific region in market growth, with a pipeline of more than 417,000 sqm prior to yesterday’s announcement. According to CBRE, data centre operators acquired 550,000 sqm of land last year in western Sydney alone.
“As digital transformation accelerates across all industries, hybrid multicloud is becoming the IT architecture of choice for leading businesses,” Charles Meyers, president and CEO, Equinix said.
“These companies recognize that digital infrastructure is a source of competitive advantage, and they are leveraging platform Equinix to directly connect and operate close to the largest cloud companies powering this infrastructure.”
Combined with Equinix’s existing hyperscale joint ventures in Europe, Asia-Pacific and the Americas, this joint venture will bring the global its “xScale” data centre portfolio to more than $7.5 billion across 34 facilities, and an expected greater than 675 MW of power capacity when completed and fully constructed.
Citi served as exclusive financial advisor to Equinix in connection with this transaction.
“We are extremely pleased to partner with Equinix on this investment in Sydney, and we look forward to expanding this strategic relationship in other markets, thereby providing our investors further access to the increasingly important digital infrastructure sector,” PGIM Real Estate CEO Eric Adler said.
This deal comes on the same day PGIM acquiring 444 Queens Street in Brisbane for $54.4 million.
Most data centre markets are set to deliver large campus hyperscale data centre facilities, including NEXTDC’s 150MW campus in Melbourne. The ASX-listed group in August spent around $24 million adding four-hectares of space to its under construction $229 million data centre in West Footscray, for a total footprint of 10-hectares.
NEXTDC also recently acquired a new site in western Sydney for $124 million, adding 300 megawatts of capacity with the 124,000sqm Horsley Park site.
With COVID-19 ramping up demand in the digital economy, other projects contributing to Australia’s growing pipeline include Macquarie Data Centre Campus on Sydney’s North Shore, as well as a $246 million data centre in Sydney’s Macquarie Park.
