Data centres in demand

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The global pandemic has ramped up demand for data centres around the world and it’s a trend that’s taking off in New Zealand, too.

Bayleys’ national director industrial, Scott Campbell said with the uptake of remote working thanks to lockdowns, corporate reliance on centralised off-site cloud computing was amplified.

“Add in new technologies such as 5G, artificial intelligence, and the huge uptick in online shopping whereby companies are reliant on cloud-based systems for on-demand ordering, inventory updates and fulfilment – and it’s no surprise that large-scale data centres are in hot demand. Campbell stressed that data centres are very expensive to build.

Auckland’s northwest will be home to a number of sophisticated data centres and there’s still more in the pipeline.

“They require resilient and secure infrastructure, need to be built at scale to achieve efficiency and profitability, they’re power hungry needing sophisticated temperature control systems and location-wise, there are strict parameters.

“Continuity of power supply and diesel backup generators are vital, state-of-the-art fire detection and extinguishing capability are obligatory and water-tight security – non-negotiable.

“They require well-located large sites for efficiencies, can’t be in a flight path or near service stations, noxious use, or where there is any threat of natural disaster, and they need to be future-proofed to cater for projected demand without becoming obsolete over time.”

Auckland’s northwest will be home to a number of sophisticated data centres and there’s still more in the pipeline. Asia-Pacific company DCI Data Centers has gained Overseas Investment Office (OIO) approval to buy land at Westgate, where it will build its first New Zealand-based data centre or server farm.

Microsoft gained OIO approval for three data centres in Auckland – believed to be in Westgate, Hobsonville and the North Shore.

Datagrid, a New Zealand start-up, wants to build a hyperscale data centre in Southland using Manapouri-generated electricity that is currently keeping the soon-to-be-redundant Tiwai Point smelter alive.

Bayleys’ global real estate partner Knight Frank has undertaken research into the data centre sector across 28 key international markets and reports strong momentum in 2021. It said while some markets have kept up with demand, there’s a shortfall in other areas.

Edge markets worth watching internationally include Africa, Istanbul and Warsaw which are picked to become significant hyperscale regions, while Mumbai and Sydney have both performed well with strong levels of new supply added to the market.

As an asset class globally, it is widely-tipped that the data centre sector will be very fast-moving with high levels of competition to secure new sites.

Stephen Beard, partner and co-head of global data centres at Knight Frank, said: “The increase in data centre facilities is becoming more widely distributed, as providers expand into new territories to add political and geographic diversity, as well as meeting new data protection legislation requirements”.

Knight Frank identified that one factor that may slow data centre expansion is the growing concern and associated regulatory response around the global climate emergency, which calls the likes of sustainable power supply into question.


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