Data centres, where technology meets real estate

Data centres and the scale of the opportunity

The global data centre sector has entered its most capital-intensive phase in history, driven by an AI supercycle that is fundamentally reshaping real estate markets globally. What was once a niche segment of commercial property has become a cornerstone of national economic policy, security and technological competitiveness.

Knight Frank forecasts global data centre capacity to expand from 62 gigawatts (GW) in 2025 to over 110GW by 2028, with AI-specific workloads rising from 12.9% to 24.5% of total capacity over the same period. The infrastructure required to support this build-out over the next five years will demand an investment of between $1.4 and $1.6 trillion, making data centres one of the most capital-intensive asset classes in the world. In 2026 alone, combined capital expenditure from Microsoft, Google, AWS and Meta is expected to surpass $650 billion, up from $376 billion in 2025.

Power, not location, now defines value

For real estate, the most significant shift is that power has overtaken location as the primary determinant of site viability.

Grid capacity across core metros is predominantly reserved through to 2030, with connection queues approaching a decade in markets such as London. Deliverable megawatts, not land or capital, now dictate growth potential.

This has created a power premium. Sites capable of delivering 50MW+ grid connections within three years command up to three-to-four times traditional industrial land values in tier-one markets. Developers are increasingly pursuing 'power-first' land strategies, prioritising parcels with realistic energisation paths and proximity to high-voltage transmission networks.

Vacancy, rents and the investment case

The supply-demand imbalance is acute.

Global wholesale colocation vacancy has tightened to 8.1%, with Europe's FLAP-D markets falling below 4%, Frankfurt sits at less than 1% and London at 3.1%. This is pushing rents upward, with new-lease rates expected to rise 8-12% annually.

Investment volumes reflect this momentum. Quarterly real estate investment in data centres has doubled from £1-£1.5 billion in 2020-21 to £2.5-£3 billion in 2025, with development site acquisitions driving the growth. The sector's largest-ever transaction, the $40 billion acquisition of Aligned Data Centers, was agreed in late 2025.

A new asset class emerging

Construction costs have risen 5-6% year-on-year, with an additional 7 to 10% premium for AI-ready, liquid-cooled facilities.

In mature markets, total build costs now exceed $10 million per MW. Meanwhile, the emergence of nearly 200 specialised 'neocloud' operators, projected to generate $179 billion in revenue by 2030, is creating entirely new occupier profiles and leasing structures.

For the real estate industry, data centres are no longer peripheral. They sit at the intersection of technology, energy and infrastructure, and the ability to secure power, navigate policy and build adaptable facilities will define who thrives in this next economic cycle.