Partner Quoted Extensively on Data Center Market Demand in Institutional Real Estate Inc.’s ‘Newsline’
BCLP Partner Eddie Lowry was quoted May 2 in Institutional Real Estate Inc.’s Newsline on ongoing demand by investors in the data center sector. “The data center market continues to produce new opportunities for investors for the foreseeable future,” Eddie said. “Based on continuing heightened demand, both new construction and existing data center properties will be good investments for passive investors and private equity as well as for owner/users. We do not see any reduction in the demand going forward in 2022 or 2023.” Investment in data centers also can pose unique challenges. “This is a highly specialized sector for the real estate investor,” he said, adding that, “We continue to have success in advising both experienced and first-time investors because of our expertise in this area.” There are several factors Eddie noted which set data centers apart from other types of real estate investment assets. “For example,” he said, “investors must be aware of the heightened power requirements, utility duplicity, failsafe power supply in the event of power outages, ever-changing technology needs and expectations, and the demands for increased data storage for data center end users.”
Energy usage remains an issue for the data center sector, and investors also are paying close attention to environmental sustainability and regulations that may be implemented to that effect. “The U.S., like the rest of the world, will continue to look for ways to reduce energy consumption in all logistics real estate functions and product delivery to the market; this is no exception for data centers,” Eddie explained, adding, “One interesting fact is that due to the hypersensitivity to air flow, data centers are a good application for brownfields developments.” Owing to a unique function of having extremely high levels of continuous air flow, data centers can be built on environmentally contaminated land that might otherwise be prohibitively expensive to clean up. “Unlike other uses, such as warehousing or manufacturing, data centers are already equipped to pump air out of the structure,” he said, “and so through the use of vapor barriers and this air flow equipment, data centers are able to use land that would otherwise remain vacant.”
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