Written by 9:00 Financial Centre, Member

Data centre boom that has been going on for years will continue to grow

Data centres are booming thanks to cloud giants such as AWS and Microsoft. FMF member BNP Paribas predicts that they will offer the greatest growth potential of any asset class in the coming years. Read more in this article.

The data centre market, which has been growing for some time, has accelerated over the past five years and has become a real boom. Cloud providers such as AWS (Amazon Web Services), Microsoft, Google and Oracle are the main drivers of this ever-increasing demand. As a result, data centres have become an attractive and powerful investment alternative to traditional commercial property. Demand for data centres will continue to grow in the coming years, driven by the ongoing digitalisation of all aspects of life and the economy, not least in perhaps the most important growth market, artificial intelligence (AI). At the same time, investor interest is set to grow significantly, and there is every reason to believe that data centres will have the greatest capital appreciation potential of any asset class over the next year or two.

Back in 2000, BNP Paribas Real Estate recognised the long-term opportunities and prospects of this market and set up a separate division to focus exclusively on the data centre asset class, as well as operators, end users and investors. Even during the dotcom boom up to 2005, BNP Paribas Real Estate brokered numerous transactions through the sale of properties in Europe. Over the past ten years, the Data Centre Solutions team has not only maintained but also significantly expanded its long-standing market leadership in Germany. Since 2018, the division, which is headed by Arno Petzold in Germany and comprises seven consultants across the country, has advised on a total of 26 sales of greenfield and brownfield sites to data centre developers and operators in Frankfurt and Berlin, with a total area of around 875,000 m² and a transaction volume of more than €860 million.

In the two most important German markets for data centres, Frankfurt and Berlin, BNP Paribas Real Estate has been involved in almost all brokered transactions in this market segment. In the Frankfurt market alone, the real estate advisor has advised on and brokered 21 transactions over the past five years. These deals have played a key role in Frankfurt-Sossenheim becoming the new hotspot of the highly specialised data centre market: All of the data centre project sites developed there for CyrusOne (formerly Zenium), Digital Realty Trust and Colt were brokered by the Data Centre Solutions team.

Other landmark transactions included the two mandates of BEOS AG for the sale of the Osthafen IT and business park in Frankfurt’s Ratswegkreisel (2020, buyer Interxion) and the implementation of a structured bidding process for the partial sale of a data centre project site in the FRANKFURT WESTSIDE development area for a project company of BEOS AG and Swiss Life Asset Managers in Frankfurt-Griesheim (start: January 2022). BNP Paribas Real Estate also brokered the site of the former Coca-Cola bottling plant in Liederbach am Taunus near Frankfurt (which Coca-Cola closed last summer after more than 50 years) to Stack Infrastructure. On an area of around 70,000 m², four data centre phases are being built with a planned capacity of 80 MVA.

The Data Centre Solutions team is currently working on more than a dozen other projects across Germany. The challenge is to find suitable sites for clients, taking into account factors such as planning permission, electricity availability and waste heat recovery. The specialists at BNP Paribas Real Estate can draw on many years of experience and a corresponding knowledge of the highly complex market.

Source: BNP Paribas Real Estate Press Release from 19 December 2023

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