October, 2026
Understanding Data Centres
With data centres firmly in the spotlight following the failed Firmus IPO and NextDC setbacks, David Balaguer, GREIT Senior Investment Analyst provides an overview of data centres and how the team approaches data centre exposures in portfolios.
- Data centres can broadly be classified as Hyperscale or Retail Colocation. Hyperscale campuses are large, single-tenant facilities with long-term leases serving tech giants. Retail colocations serve many smaller enterprise tenants, offering shorter leases and more frequent rent resets; a distinction crucial for evaluating cash flow stability and investment risk.
- AI now accounts for roughly a quarter of data centre capacity and is projected to exceed half by 2030. This underscores a transformational growth driver for the sector but elevates the appeal of retail colocations, which are more adaptable to advancing technology which is rapidly evolving.
- Power delays and setbacks for firms like Firmus and NextDC highlight rising social license risks and regulatory hurdles globally. These pressures tighten new supply potentially benefiting existing players that own capacity in key markets.
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