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Commercial Trend Watch: Data Center Real Estate

February 7, 2019
Commercial Real Estate
By: Jason Holte

As companies digitize more of their processes, the demand for data centers continues to grow. Here’s what industrial real estate brokers need to know.

We are reliant on computers. Largely, this is a good thing. Digital resources have enabled us to navigate our work and personal lives much more efficiently. Because technology has become indispensable, however, it is imperative that the information we need to conduct business is readily available. That’s where data centers come in.

Data center

Per a Cisco study cited by Colliers International, capital expenditure on infrastructure for cloud-based services rose over 50% in the third quarter of 2018 as compared to the year before. Further, 83% of corporate executives and investors surveyed by CBRE expect the demand for cloud computing to continue to rise. This makes data center real estate a promising opportunity for commercial real estate brokers with a heavily industrial portfolio.

Savvy brokers aren’t using low-tech solutions to find attractive locations for these high-tech facilities. Let’s take a look at what we know about the properties that companies choose for new data centers. Then, we’ll walk through how you can easily locate suitable properties in any market using our map-based real estate application, LandVision™.

Data Center Site Requirements

One factor that makes data centers an exciting prospect for commercial brokers is that they don’t necessarily need to be built on massive properties. According to The News Funnel, the average industrial property housing a data center facility is just 150,000 square feet. This means that there should be no shortage of promising opportunities within a given area.

Efficient data centers often require environmental controls including air conditioning, as well as access to large amounts of uninterruptible power. Because of the business impact of unplanned downtime, the best locations will also be sufficiently removed from natural hazards or any other factors that could interrupt service.

Using LandVision to Find Data Center Sites

Using LandVision to find data center locations

LandVision gives you the ability to search for properties that meet your target criteria so that only suitable results are displayed. This can include property type, lot size, land use, zoning, and much more. LandVision also allows you to overlay hazard data so that you can understand how factors such as flood zones or wetlands will impact a commercial property. With these areas identified, you can exclude properties located within hazard zones from your search results to proactively mitigate risk for your clients. Because LandVision is configurable to meet your business needs, you can also import publicly available or proprietary data to visualize things like electrical transmission lines alongside our map-ready content to better understand the available power supply surrounding a property. Combined, this information will ensure that only the most suitable properties make the cut.

Once you have selected your target locations, LandVision makes it easy to begin lease negotiations. LandVision provides you access to complete ownership information for any property on your list, even if it’s held in an LLC or trust. Armed with the transaction history and assessed value for every property on your list, you can be prepared to make a fair offer on behalf of your client.

Learn More

Over 17,000 commercial real estate professionals trust our location intelligence platform to help them find off-market opportunities and win more deals, and we’d love to show you why. Request a LandVision trial today, or contact us for more information! For more on this topic, learn how DMP client NAI Capital uses LandVision to uncover opportunities.

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