Converted Into Data Centres

Ageing Office Bldgs Being Converted Into Data Centres

GLOBAL – With demand for data increasing, real estate investors are preferring to turn empty warehouses or old office buildings into data centres as it’s quicker and more affordable than building a new data centre, according to a new report published by Jones Lang LaSalle (JLL) on Monday (3 October).

In Hong Kong, logistics real estate manager ESR purchased a cold storage facility in 2021 and is redeveloping the property into a 40-megawatt data centre after recently obtaining permission from the Chinese territory’s Town Planning Board.

In the US, the Union Bank Tower, a 54-year-old office building in Portland, Oregon with a height of 15 storeys is being disposed and repurposed into a data centre.

JLL’s Managing Director of Data Centres in Asia Pacific Chris Street revealed that investors are presently pursuing conversions that take about 1 year to finish. In comparison, building a new data centre can take up to 26 months, this doesn’t include the process to obtain permission from the relevant government agencies.

However, Street explained that not all existing properties can be converted into a data centre. For example, in densely populated cities such as Hong Kong, it’s cost-prohibitive to transform an existing building into a high-rise data centre.

“The structural additions needed to modify an office building can be quite complicated. For instance, these buildings typically won’t have the sufficient slab-to-slab height clearance that is a prerequisite for high-density data centres.”

For emerging markets, particularly in the ASEAN region, the dearth of suitable redevelopment sites with suitable structural attributes also poses problems for data centre operators seeking to turn old buildings into hyperscale data centres. Moreover, most brownfield sites in the region are ageing and underdeveloped.

In addition, there are other vital considerations before a property can be transformed into a data centre. “Other than getting the physical structure right, ensuring the availability of access to power, water sources, and fibre connectivity is equally critical to the success of the project,” added Street.

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