Governments and businesses rely more and more on data to get things done in better, smarter and more efficient ways. But data centres, the new critical infrastructure, aren’t just about storage anymore; they’re where AI-driven insights can be gleaned about customers, where ‘compute’ power to crunch the numbers is a necessity for you to find your edge. This guide is designed to provide you with what you need to know to join the data revolution, whether you’re considering investing right through to delivering a data centre project.
Investment appeal of data centres
If you are an institutional real estate investor, why might you opt for a data centre rather than something else?
Patient capital
Data centres are in increasingly high demand, with historically high returns – a good combination. Significant capital expenditure up front is a requirement, and returns aren’t immediate. This ‘patient capital’ approach isn’t for everyone, but the returns are often worth the wait.
Profitable splicing
The play for the smart institutional money might be in the synergy found between life sciences and data centres. Life science tenants such as genomics and biomedicine rely on data and benefit from reduced latency and proximity to compute resources. That opens the door to a campus being a profitable splicing of life sciences and associated technologies, one that hedges against the risk of vacancy.
The power challenge: Never underestimate the importance of connection
You’ve settled on investing in data centres, but there’s a sizable challenge: the lack of reliable, sufficient power. What can be done?
Power-hungry demands
National Energy System Operators (NESOs) manage grid connections and invest in infrastructure, such as upgrading substations and developing parts of the network, to handle the power-hungry demands of emerging technologies. And data centre projects applying for connections tend to be aligned to government priorities, which helps when it comes to planning and zoning decisions.
The moving deadline
NESOs do not provide firm commitment dates to deliver power, which continues to be the biggest constraint in the development of data centres. Life sciences clients, for instance, need to have specific go-live dates for their data centre requirements, but seldom get them.
Cyber resilience – legislation and the importance of a back-up plan
Outages, breaches or losses at a data centre are worst-case scenarios, and there is specific legislation governing cyber resilience requirements, particularly where personal data is concerned.
Backing up and ‘bank vaults’
To mitigate risk, back-up data centres in separate locations are becoming more commonplace, providing a safety net should a single power failure strike the primary one. An additional cost, certainly, but peace of mind is guaranteed. Automatic failover systems are also used, where completely mirrored set-ups switch on if there's a power loss.
For high-security clients such as pharmaceutical companies or government departments, there’s an extra layer of protection offered. ‘Bank vaults’ within data centres are rented out to these organisations which provide the ultra-secure failover and backup set-ups they demand. This blend of the physical and technical back-ups ensure that cyber resilience is paramount.
Getting ahead of complexity when developing data centres on existing sites
With data centre development comes myriad considerations, many of which can be easily overlooked.
Planning and coordination
Building data centres on existing corporate or campus sites introduces complexities that require careful planning and coordination. There are challenges of managing varying lease structures, securing development rights for critical infrastructure (power, cooling, connectivity), and maintaining existing operations during construction. ‘Simple things’ such as planning permissions, procurement processes, and legal rights need to be factored in, with significant impacts for large development timelines if they are not.
Key considerations
Other considerations include phasing construction to minimise disruption, managing stakeholder expectations across different tenant groups, and the need to coordinate multiple workstreams simultaneously. Planning constraints, zoning requirements and power availability are also important when determining location.
Integrated expertise and future-proofing – building the right team
As the previous points have shown, delivering a successful data centre project is a complicated endeavour. Its success is dependent on lots of factors, but the need to bring together the right people from the outset is fundamental.
Experts from end to end
This integrated approach goes far beyond traditional real estate or IT project management, but is critical to prevent costly mistakes, accelerate timelines and ensure long-term operational effectiveness.
When you’re looking into starting a data centre project, Mishcon de Reya already has the multi-disciplinary team of experts built for you, covering real estate, privacy, cybersecurity and compliance.
We anticipate what’s coming around the corner; we understand the technical requirements and your business objectives. So, if you want someone to take your data centre project from inception to delivery, we help clients deliver at the edge of what's possible.
Watch our film to hear directly from three of our data centre experts, or contact us to discuss your specific circumstances.