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– we ’ ve also got to find the power and that ’ s become a real issue , particularly in the UK .
In London currently , we ’ re effectively out of power . The National Grid and our infrastructure haven ’ t been able to keep up with the insatiable need of the enduser . I think the impact will have a positive result for those markets outside of the core London markets . We ’ re looking at a couple of very big sites in the south-west region – Bristol and Newport – which have the advantage of connections with the US . A lot of the data we ’ re transferring goes to the US via the M4 corridor out via Newport and Bristol through the transatlantic subsea cable which lands in New York . Those locations which are close to that data bullet line should in the long-term see some significant gains .
Being a Mancunian , I ’ ve got to promote Manchester as the second market in England . We ’ re seeing a lot of macro movement in terms of investment justifications in Manchester . Several major corporates have moved there such as the BBC and ITV . The fibre connectivity has improved to the extent that the latency – the speed at which you can send , process and distribute data – is just as quick as it would be from Birmingham to London . So there ’ s not as much of a geographical impairment from a location standpoint . We ’ re also starting to see the rise of Edge data centres .
With a global presence , how do Knight Frank ’ s regional markets differ from one another in terms of customer demand and growth and how do you meet expectations ?
When I made the decision to come to Knight Frank it was on the basis that we had a very large network across Europe , Asia and the US . The first 18 months were all about educating our local teams on the ground and making sure they understood what ’ s required by both the data centre user and the developers . What ’ s happening at a macro level is that there are certain countries in emerging markets predominantly through Central and Eastern Europe from a European perspective , and South-East Asia , where they ’ re only just beginning their digitalisation story . The governments in each of those countries are looking at the commercial and social benefits of migrating their IT infrastructure into public cloud . So they ’ re tending to the likes of Microsoft , Amazon and Google and therefore , the data centre markets there are experiencing significant growth . Most of my travel tends to be in markets which are about to experience significant growth . We try and get ahead of the market – our USP is that we don ’ t follow the cloud , we don ’ t track the cloud , we get ahead of it .
Where in the UK is best for data centre investment and why ?
With the majority of our population residing and working in London , it will always be the focal point . London is the second largest market in the world , second only to North Virginia , which is good news for our economy on the back of things like Brexit and COVID . This also depends on the government ’ s approach to supporting and aiding the digital economy and a lot of that is through protecting the growth of data centres .
In terms of investment today , if you were so lucky that you had a ready-made industrial brownfield land parcel along our golden corridor , which is predominantly Slough to Hayes and you were able to secure power by some means because it effectively is out of power , then you ’ re sat on a goldmine . The land price that some would be willing to pay for that type of product is astronomical .
From an investor perspective , when it comes to fixed income investments very typical to an office investment or a retail investment , the downside of data centres is the illiquidity of stock . Most data centre operators require freehold land because the cost of building out the data centre is so extortionate that they can ’ t be at risk of being kicked out of the building by the landlord at any point . To put it into perspective , if the average-sized data centre in the UK or London going forward is 50MW , it usually costs about £ 10 million per MW in terms of fitting out the facility – that ’ s a 500 million CapEx liability . But there are opportunities – we ’ ve been buying and selling a few smaller fixed income assets throughout the UK . Personally , I ’ d be concentrating on Manchester . If you look at every other European country , they all seem to have a very strong secondary market and I think Manchester will soon take off .
What major developments can we expect to see this year in the UK ’ s data centre sector ?
We ’ re a very opaque market , which is frustrating and we at Knight Frank are trying to change that – starting with the education process . The reason why the industry is inherently opaque is because much of the stored data is sensitive . When you look at the next threat to a country , it ’ s more than likely going to be a digital attack rather than a physical attack . The next terrorist attack will likely be on a data centre so it ’ s very difficult for us to talk about major new developments , but I think there ’ ll be a couple of announcements about some fairly large schemes in West London and North London . There ’ ll be three or four announcements in Manchester too . I think the opportunity for investors is to marry their portfolio and investment considerations alongside that of this Edge rollout . � www . intelligentdatacentres . com
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