Data centres provide growth opportunities
This is providing companies with an increased capacity to process, store and analyse high volumes of customer and transaction data quickly and cost effectively.
The Australian Securities Exchange was one of the first higher-profile organisations to invest in the sector when it moved its data to the new $400 million Gore Hill data centre in NSW in 2011.
British group Global Switch was the first significant entrant into the data centre sector in Australia. It opened in Sydney in 2000 and secured Macquarie Bank as its first customer.
The latest entrant is the US-based Digital Realty Trust, a major competitor to Global Switch.
Digital Realty is first and foremost a property REIT, which buys and develops sites that are then leased back to companies for their data centres. The group generates income as a rent-collecting REIT and the tenants do their own internal fitouts. The warehouses can be leased on a 1000-square-metre "pod" within a larger building, or they can take out the whole site.
Digital Realty's first foray into Australia was with the National Australia Bank's complex at Deer Park.
According to NAB it is a multi-year, multibillion-dollar investment to transform its total IT environment. This includes the bank's core system (NextGen) and applications, infrastructure, network and culture.
The centre will feature the next generation of data centre innovation and is among a few of a similar standard in Australia.
Each "hall" has two uninterruptible power supplies (UPS) and three back-up generators. Each UPS is in its own fireproof cell.
Digital Realty's senior vice-president and regional head, Asia Pacific, Kris Kumar, said the data centre REIT sector was tipped to expand as companies struggled to store their data.
"The global footprint of this sector is growing fast. We find the greenfield sites and develop them for the customers," he said.
Agents say they are also getting more inquiries from companies wanting to store e-commerce documents.
Frequently Asked Questions about this Article…
The article says data centres are shaping up as a growth sector because more companies are moving their expanding IT infrastructure off-site to process, store and analyse large volumes of customer and transaction data quickly and cost‑effectively. That rising demand for capacity is creating new investment opportunities in the sector.
According to the article, Digital Realty operates primarily as a property REIT: it buys and develops sites and then leases them back to companies. The group earns income as a rent‑collecting REIT while tenants carry out their own internal fitouts, making leasing cash‑flows the core revenue source.
The article notes British group Global Switch was an early significant entrant, opening in Sydney in 2000 and securing Macquarie Bank as its first customer. The Australian Securities Exchange (ASX) was an early high‑profile investor when it moved to the $400 million Gore Hill data centre in NSW in 2011. The US‑based Digital Realty is described as a more recent entrant.
Digital Realty’s first foray into Australia was with the National Australia Bank’s complex at Deer Park. NAB described the project as a multi‑year, multibillion‑dollar investment to transform its IT environment, including its core system (NextGen), applications, infrastructure and network.
The article describes next‑generation data centre standards that include redundancy such as two uninterruptible power supplies (UPS) per hall and three backup generators, with each UPS located in its own fireproof cell. These features support reliability and high availability for tenants.
Per the article, data centre space can be leased in modular units — for example a 1,000‑square‑metre “pod” within a larger building — or a tenant can take an entire site. Tenants usually perform their own internal fitouts after leasing the space.
The article says agents are receiving more inquiries from companies wanting to store e‑commerce documents and other growing volumes of data. Overall, businesses’ need to process, store and analyse larger amounts of customer and transaction data is pushing demand for off‑site data centre capacity.
The article highlights that the global footprint of the data centre sector is growing fast and that data‑centre REITs (like Digital Realty) provide a rent‑collecting, property‑based exposure to that growth. It’s a sector to watch for potential growth opportunities, but investors should research specific companies and strategies before making decisions.
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