A New Niche In Real-Estate Goes Mainstream!

In today's digital-driven world, the exponential growth in data storage and processing needs is undeniable. From cloud computing to e-commerce, businesses of all types increasingly depend on data centers to keep their operations running smoothly. Yet traditional new builds can take up to 26 months to complete, which makes it difficult to meet the urgent demand for data centers. This gap has given rise to a new niche in the industry—data center conversions.

What is a Data Center Conversion?

A data center conversion involves transforming an existing building, such as an old office block or warehouse, into a functional data center. This process typically takes about a year, significantly reducing the lead time compared to new builds. The result? A faster, more efficient way to bring new data centers online.

The primary allure for investors is the reduced timeline. Converting an old building into a data center usually takes around one year, compared to the 26 months required for a new build. This rapid turnaround is crucial for meeting the increasing demand for digital services.

Building from scratch is expensive, especially with the rising costs of raw materials due to supply chain disruptions. Conversions offer a more budget-friendly alternative, as they involve modifying existing structures rather than starting from the ground up. These savings can be substantial, making conversions an attractive option.

The Rise of Vertical Data Centers

Old office buildings and warehouses often come with existing infrastructure that can be repurposed. This includes electrical systems, HVAC, and even structural elements that can be adapted for data center use. Leveraging these existing features further reduces costs and speeds up the conversion process. In the U.S., the 15-story Union Bank Tower in Portland, Oregon, is being sold for conversion into a data center facility. This 54-year-old office building will soon serve as a hub for digital operations, demonstrating the versatility of data center conversions.

Key Considerations for Successful Conversions

Structural Integrity

Ensuring the building's structural integrity is crucial. This includes making necessary upgrades to meet the requirements of a data center, such as increasing floor load capacity and improving slab-to-slab height clearance.

Power and Connectivity

Access to reliable power sources and fiber connectivity is essential for the success of a data center. Ensuring that the converted building can support these needs is a critical part of the process.

Water Resources

Cooling is a significant concern for data centers, making access to water resources another key consideration. Ensuring that the building has adequate water supply and drainage systems is vital for maintaining optimal operating conditions.

Data center conversions are a promising solution for addressing the growing demand for digital infrastructure. By repurposing old office buildings and warehouses, investors can bring new data centers online more quickly and cost-effectively. While there are challenges to overcome, the benefits of speed, cost savings, and leveraging existing infrastructure make conversions an attractive option.

Disclaimer

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