Data centre net absorption doubled in 2020, setting an all-time high. Sydney and Singapore were the top two Asia Pacific markets for demand, according to CBRE’s latest research.
Three key takeaways:
“The COVID-19 pandemic has accelerated digital transformation across areas such as e-learning, online shopping, content streaming and entertainment,” says Cameron Grier, CBRE’s regional director of industrial and logistics for the Pacific.
“Business continuity planning has also prompted the rapid uptake of cloud adoption to support remote working. Looking further ahead, the wider adoption of 5G, further digitalisation of healthcare and other government services will be the primary demand drivers of data centre growth.”
Grier says data centre groups have been “very active” in Sydney and Melbourne over the past year and are now looking further afield to South Australia and Western Australia. He points to the purchase of 555,000 sqm of land in Western Sydney last year for hyperscale cloud sites.
“Data centre demand is pushing industrial land prices up across the country. For instance, the market rate for benched and serviced land in Eastern Creek and Erskine Park is paying anywhere from $1,000 – $1200 per square metre, which is above market price,” Grier says.
On the supply front, the four Asia Pacific Tier 1 data centre markets of Tokyo, Sydney, Singapore and Hong Kong SAR recorded unprecedented growth in total colocation capacity in 2020, which increased by 17 per cent year on year.
CBRE expects 2021 will see a further increase in new completions, with several projects experiencing pandemic-induced construction delays during 2020 finally scheduled to come on stream.
Overall vacancy in Tier 1 markets continued to trend downwards over the year, falling to 13.9 per cent by the end of 2020.
Other key trends identified in the report included an uptick in demand for ‘edge data centres’, which are smaller facilities located close to users and serving a small, limited area. Potential markets include suburban areas in Australia.