Demand for data centres has heightened during the lockdown, with huge schemes set to transform industrial areas in London and the commuter belt.
The lockdown has sparked a boom in planning applications, with the number of applications for new data centres during this period surpassing 2019 figures.
According to figures from EG Radius Exchange, the number of data centre plans lodged since the government enforced lockdown on 23 March totals over 2.27m sq ft of space.
The bulk of this was lodged in the last month, with major schemes planned for London and the South East.
Ark Centres is consulting on plans for a 600,000 sq ft data centre at Union Park (pictured). It said development of the Bulls Bridge Industrial Estate in Hayes responds to growing demand for data centres as consumers, business and the public sector increase their reliance on the digital economy.
In Slough, Zurich Assurance is planning a data centre of over 1m sq ft at the Langley Business Centre, as part of a mixed-use scheme.
In total, 30 applications totalling over 2.63m sq ft were put in over the whole of 2020, 23 of which were made during lockdown. In the last three years there have been applications for 8.9m sq ft of data centres, with developers reporting much more in the pipeline.
Matteo Colombo, strategic capital investment director at Legal & General Capital, said: “Since 2015, compute and the cloud has almost doubled every two years. The coronavirus pandemic has further accelerated the level of compute demand, owing primarily to remote working and the need for high-performance compute to drive R&D progress – particularly in areas such as life sciences.”
With investors chasing speculative builds with high yields to recoup capital quickly, some firms are moving rapidly to capitalise on the intensified demand.
Cromwell Property Group has partnered with Stratus and EXS Capital Group to launch a data centre fund targeting a $1bn (£780m), with one site already under exclusivity in London.
Rob Percy, chief investment officer at Cromwell Property Group, said: “As demand for faster connectivity accelerates, driven by AI and the Internet of Things, there is an attractive opportunity to devise real estate investment strategies that plug into that growth.”
Percy said a speculative build would normally only start once strong lease pre-commitments had been secured, with new sites paying for themselves in a short period of time.
“Once up and running, the risk to investors is limited with phased build outs possible and datacentres typically producing high EBITDA margins and high cash conversion,” he said.
“Our recent experiences during the Covid-19 pandemic have shown that the future long-term demand for applications that rely on datacentres appears to be not only healthy, but to have been significantly reinforced by our rapid and widespread adoption of remote working and other technology enabled practices.”