Hyperscale data centres are a recent addition to Auckland’s landscape. Several are completed or near completion, and more are in the works.
Household names such as Microsoft and Amazon are developing the sites themselves, while others are renting space from data centre specialists such as CDC Data Centres and DCI Data Centres.
The logic behind the proliferation of data centres in Auckland is well known, but in essence there has been a massive increase in demand for cloud computing.
Gaming and streaming demand is burgeoning, while artificial intelligence will add huge demand given that it uses 10 times more data than traditional search engines. There’s also the basic need for more and more companies and government agencies to store data much more securely than has been necessary in the past, driven in part by legislative requirements.
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All that data won’t be in a ‘cloud’ above Auckland, of course, it will be housed in hyperscale data centres. Having been involved in around a dozen data centre transactions in Auckland to date, Colliers has detailed knowledge of their unique site requirements.
Alan McMahon, National Director of Strategic Advisory at Colliers, has worked on a number of those transactions and says it is an intricate process to find a suitable site.
“Sites for data centre development need to have sound geotechnical characteristics – these buildings are very heavy. To spread the load they prefer to be low-rise, so larger sites are preferred, often around two to three hectares. Multiple points of access and egress are usually required,” McMahon says.
“Availability of power is key. Not all areas of Auckland have substations capable of providing dedicated power connections with the capacity required. Distance from substations can’t be too great either, given the high cost of providing these exclusive connections. Latency, or the time taken to transfer data is also a factor in assessing a site’s potential.
“While latency is measured in milliseconds, the distance between an operator’s network of data centres, and to and from the substations providing power, is key.”
Josh Coburn, Director of Site Sales at Colliers, says data centre developments have created a lot of interest in Auckland’s property market, not least due to the escalating land prices that have been paid on occasion, as well as the lack of suitable large sites.
“That reflects the difficulty of finding a site that ticks all the boxes, the expense of construction, which makes the land cost less critical, and also competition in the market when these transactions have occurred,” Coburn says.
Blair Peterken, Director of Capital Markets at Colliers, says the growing interest in the availability of sites that are suitable for data centres has only added to the constrained supply of land in Auckland.
“We are continuing to receive enquiries from local and offshore parties about the opportunity to acquire greenfield land in Auckland that can be used for data centre purposes, and we expect this demand to grow as the need for these sites becomes greater.”
- Article supplied by Colliers
