Demand for data centres driving up industrial land prices: CBRE

The supply of commercial space given over to data centres in the Asia Pacific region doubled last year, pushing up industrial land prices across Australia, according to a CBRE report, released 25 March.

“The COVID-19 pandemic has accelerated digital transformation across areas such as e-learning, online shopping, content streaming and entertainment,” says Cameron Grier, Regional Director of CBRE Industrial & Logistics in Pacific.

“Data centre demand is pushing industrial prices up across the country, for instance the market rate for benched and serviced land in Eastern Creek and Erskine Park is paying anywhere from $1000 to $1200 per square metre, which is above market price,” he says.

Data centre groups have been very active in acquiring land in Melbourne and Sydney.

“Last year alone in Western Sydney, data centre groups acquired circa 55ha (550,000sqm) of land for hyperscale/cloud sites,” Cameron says.

While the demand for data storage has been driven by business’s need for cloud adoption and remote working arrangements, Cameron says there will be other factors pushing demand in 2021.

“Looking further ahead, the wider adoption of 5G, further digitalisation of healthcare and other government services will be the primary demand drivers of data centre growth,” he says.

The report also identified an uptick in demand for edge data centres, smaller facilities located close to users that serve a small, limited area. The demand for edge data centres is occurring particularly in the suburban areas of Australia.

“Recent activity in this segment includes Leading Edge Data Centres’ announcement that it would build 27 edge data centres across New South Wales, Victoria and Queensland in Australia within the next two years,” the report says.

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