This article is from the Australian Property Journal archive
CONSTRUCTION times for new Australian data centres are slowing down as supply of suitable land dwindles and material shortages remain.
According to CBRE’s Q1 Asia Pacific Data Centre Trends report, new Australian data centre supply is now fully contracted, due largely to rapid cloud adoption and AI demand.
“Due to long lead times for data centre construction off the back of shortages of certain materials such as chips and transformers, construction times have blown out and this will constrain supply in the medium to long term,” said Darcy Frawley, pacific director of data centres at CBRE.
Following trends seen throughout the US and Europe, Australian corporates are increasingly moving away from in-house models and instead adopting a third-party co-location approach.
Including many service sector and telecommunication companies that are shifting away from their current model of operating legacy data centres, due to high running costs for facilities that out of date and inefficient.
This has contributed to increased data centre operators demand for suitable land in both Sydney and Melbourne.
“Many industrial developers across the country are now considering power shell data centre developments to obtain exposure to the asset class,” added Frawley.
“While data centre operators have historically been reluctant to partner with industrial landlords, some groups are now considering this form of ownership as land and power becomes harder to procure in key markets.”
Additionally, the report highlighted power supply as a key tend as adoption of renewable energy fails to keep up with both current and future requirements.
“Against this backdrop, locations such as Perth and Queensland, where renewable energy projects are more prominent, could potentially attract a new wave of data centre construction,” said Frawley.
“However, Sydney and Melbourne remain the favoured locations for data centre operators despite ongoing challenges around power availability in the key customer zones.”
Meanwhile, investment activity throughout 2023 was limited across the asset class. Despite high demand, investable product cannot meet investor needs.
“Other investment trends include Australian super funds making large platform investments into Europe and elsewhere around the globe,” added Frawley.
“Examples include AustralianSuper’s acquisition of a minority stake in Vantage EMEA for around US$1.6 billion and Aware Super’s US$500 million investment in US-based operator Switch.”
