Data centres adding to industrial property’s resiliency

Posted On Monday, 03 August 2020 17:50 Published by
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As more and more of our daily life moves online, the data centre is fast becoming a key asset for service providers.

Johann_Nell

Demand for data centre space continues to grow in step with technology, which has touched every aspect of modern life and business. According to JSE listed diversified REIT Redefine Properties, accelerating trends like e-commerce and data centres are adding resiliency to industrial property against the backdrop of the Covid-19 pandemic. 

“While online sales (R14 billion, 2018) still constitute a fraction of what South Africans spend in the malls, online shopping has shown exponential growth, and this has had a direct impact on real estate demand. The promise of same day delivery / overnight shipping, a benchmark in fulfilment, requires massive warehouses to be situated close to the communities and in many cases are larger than traditional warehouse,” says Johann Nell, National Asset Manager, Industrial, Redefine Properties. 

“The trend that has us equally excited is the growth in demand for data centres. This is driven by key changes like remote working, rise in e-commerce and on-demand streaming services, mostly triggered by the pandemic. Like e-commerce, the big data phenomenon is not new, yet, it wasn’t until the pandemic that it started to manifest itself in the real estate sector.”  

Two of Amazon Web Services’ (AWS) three availability zones in Cape Town are situated at Redefine’s Brackengate 2 and a new one at the R3.5 billion Atlantic Hills Business Park. The Atlantic Hills precinct is situated on the Potsdam interchange, aligned with the M12 extension with immediate access onto the N7. The 45-hectare park has rights for industrial and commercial uses and offers prospective tenants and investors space ranging from 600 sqm to 40,000 sqm. 

“The industrial property sector stands to benefit from the huge growth in data consumption as well as Internet of Things,” adds Nell. 

“We believe the remote working trend is going to be triggered more widely across other industries and that’s going to drive the need for very strong data centre capacity. Today you can conduct a face to face meeting with anyone, anywhere by simply clicking on a web application and even record to minute the conversation.”    

The rollout of 5G networks is another positive development that is set to promote growth in the data centre market. The promise of artificial intelligence can only be actualised when DCs can store, process and analyse data faster. These innovations bode well for industrial property and distributed data centres.  

Redefine’s projects like Atlantic Hills and Brackengate 2 in Cape Town and S&J Industrial Estate in the east of Johannesburg offer purpose-built warehouses, vacant land for investors as well as high speed internet connectivity. These factors seamlessly fit into the growing edge computing trend which seeks to bring computing services closer to the customer.  

Servers use tremendous amounts of electricity and generate a lot of heat, which in turn requires extensive investments in cooling systems.  

“In the current scenario, power is of genuine concern, however at our properties we are getting around it through better use of power and using it more efficiently. We are able to generate our own power through Tri-Gen methods that includes gas and solar as energy sources, thereby supplementing constrained grid access in certain nodes,” adds Nell.   

“Like e-commerce before the data revolution, South Africa is still very much in infancy and a lot of work still needs to be done for DCs to emerge as an asset class. Long term prospects depend on long tenure, security of demand and new age thinking. Deal structures will certainly involve a need for tailor made solutions that benefit all.”  

Whether an economy is driven by manufacturing or information, the age old fundamentals of real estate still apply, location, location, location.  

“We are aligning our products and services to be fit-for-purpose for the factories of the 21st century. We are people looking to house a new commodity and that is data,” says Nell in conclusion.  

Last modified on Tuesday, 04 August 2020 18:00

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