Storage facilities are on the rise in Commercial Real Estate, but why?
Storage facilities are on the rise in Commercial Real Estate, But Why?
Two Words - Data Management.
If you take a drive through the town of Dublin, Ohio just a few miles outside Columbus you can observe 68 acres of commercial infrastructure. What you won’t see is the bustle of workers in or outside those buildings. This property is the home of one of Amazon’s largest data management facilities, and there are thousands more like it. Data center facilities that focus on biometric, web and big transaction data is becoming a larger piece of the commercial real estate pie. Cloud empowered technology has blown up in the last year. As old leases expire, a new wave of leases in CRE are filtering through. Jones Lang LaSalle, the largest publicly traded commercial real estate brokerage firm in the world, projects close to 204 billion dollars in data management facility related acquisitions in the year 2018 alone.
Not Just ANY Warehouse
This is not your father’s infrastructure. Data centers need a particular type of building, they can't be in just any warehouse. These facilities house state of the art high tech equipment that needs to stay at a constant temperature. Even 10 minutes of overheating can cause an entire server system to go down. Climate temperature is the number one concern for these types of facilities.
The Race For Cheap Energy
Where are these facilities expanding? Well, it is wherever the energy is the cheapest and municipalities offer the best incentives. In cities around the great lakes and areas of abundant kenotic water like Washington state, hydroelectric power is offering the potential for cheap energy. Facebook, IBM and Century link all have their major data facilities located on the shores of Lake Michigan outside Chicago. These data management facilities use water from Lake Michigan for cooling fluid. The water is then channelized into a state of the art recovery system.
Data Management On The Move
It is undebatable that the data center sector is on the rise with guaranteed growth for the foreseeable future. It will continue to change the sectors of commercial real estate for many years to come.
- Contributed by Sarah Waski