This article is from the Australian Property Journal archive
AGILE institutional investor Centuria Capital Group is looking to the future of the surging data centre sector, acquiring a 50% in provider ResetData in another early-mover play – this time, with a focus on liquid immersion cooling (LIC) technology that harbours potential to unlock value in existing office buildings, capitalising on demand for data storage which is rising by at least 30% every year.
The fund manager is spending $21 million to acquire the half-share in Sydney-based ResetData, which has existing partnerships with Dell, artificial intelligence chip leader Nvidia, Submer and Unicom Engineering to provide original equipment manufacturer capabilities for liquid immersion cooling (LIC) technology.
LIC allows for a smaller footprint than the traditional data centres that are often developed on larger-scale green- and brownfield sites. The efficiency of LIC means 100 sqm of “white space” within an office floorplate could potentially house up to 1.5 megawatts of capacity – in comparison, a traditional 1.5-megawatt data centre would require approximately 1,000 sqm of white space.
As part of the deal, ResetData will take a 10-year lease at Centuria’s 818 Bourke Street, with LIC technology allowing for a tier 3 data centre with a capacity of up to 1.5 megawatts to be built within the office asset – providing a boost in value at a transitional time for the office market.
“You’ve got up to 10% or 15% increase in the value of the building by leasing a small part of it. They are very big numbers to play with,” Centuria CEO John McBain told Australian Property Journal.
Major traditional office buildings have been trading at significant discounts in the wake of emptied CBDs during COVID and the adoption of working from home.
Centuria believes about a dozen buildings within its portfolio may be suitable to similar data centre projects, based on their individual current vacancies and electricity supply.
“If it’s fully leased, it doesn’t present the opportunity,” McBain said, noting that its office portfolio occupancy is in the high 90% range, and that the 818 Bourke Street opportunity is helped by the asset having two existing substations within the building.
Works on the building will cost between $12 million and $14 million – less than the office incentives for that rent.
Centuria chief financial officer Simon Holt told Australian Property Journal said the project would take six to nine months, depending on planning permits.
“There’s a bit of work to do, but it’s really setting it up so you can operate at a tier 3 level. However, there’s two substations in the building, and one was actually built for the previous tenant who was running their data centre. So we’re feeling pretty comfortable with the amount of effort that is required.”
“The building is designed to be able to do this.”
McBain said demand for data storage is increasing over 30% per annum, and supply is less than 6% per annum.
“People are going to be looking all over the country for potential places to have your data storage.
“The saving is to go to liquid-cooled – around 40% to 45% in terms of energy. For people who really require their data closer for latency, that is really bringing the cloud to your office building.”
He noted Nvidia is no longer designing chips for air-cooled centres – the energy loading on a chip is so high in terms of wattage that it can’t be cooled in a pure air environment.
“It has to be cooled by liquid. It’s really where we’re going with this opportunity. This won’t be a question of choice.”
“There’s pressure on electrification of buildings from the government down, NABERS and fund managers.
“This is an incredible, very energy-saving solution.
Talking to Centuria’s move into the data centre space, McBain said, “We’ve been wanting to do it in a way that we think is innovative and has a scale that we can be a first mover in. We like being a first mover in something,”
McBain said, “We were one of the first getting into private credit, and one of the first getting into health care. We’re not going to go out and buy 40, 50 broad hectares of land all over the country to build air-cooled centres because we think that technology will get bypassed.
“I think it’s going to be a very, very important revenue contributor for us within 24 months.”
