Unlocking Alternatives: Investing Beyond the Major CRE Asset Type


• As many owners in the space are either operator / investor vehicles or, increasingly, hyperscalers through self performance operations, sales in the sector are limited. • While transaction volumes have tempered somewhat from the past several years, sales of existing assets do occur, typically as part of the M&A of an operator, geographic expansion / retrenchment or distressed operator margins. • A number of significant acquisitions have occurred over recent years. In 2023, Brookfield purchased Compass Datacenters for an estimated $5.5B, following in the footsteps over other significant data center operator acquisitions: KKR/GIP purchasing CyrusOne (2021, $15B), Blackstone purchasing QTS (2021, $10B), American Tower buying Coresite (2021, $10.1B), DigitalBridge / IFM acquiring Switch (2022, $11B). • In other cases, certain operators have sold or diluted their control of assets in order to help fund the development of new data centers. Given the relatively high cost of development, operators require significant capital to redeploy and expand their pipelines. • Cap rates have continued to compress as larger, more modern assets increasingly make up transaction sales. • A significant amount of capital activity in the space goes toward purchasing land, which has faced rising costs in recent years. As local land markets have reacted quickly to the arrival of new data centers, construction of these assets is often capital intensive, with development budgets often running into the billions of dollars for data centers sized for hyperscale use.

North American Pricing & Volume Trends

$10 $15 $20 $25 $30 $35 $40

$ $1 $2 $3 $4 $5 $6 $7 $8 $9 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

$ Millions / MW

$ $5

Billions Transacted

Sales Volume (LHS)

Average of $/MW (RHS)

North American Data Center Cap Rates

$2B $1B Seattle Atlanta Los Angeles Phoenix Philadelphia Top Markets by Sales Volume 2011 - 2023

4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50%

$2B $2B $2B $2B

DC/NoVa NYC/Northern NJ San Francisco Bay Area Chicago Dallas


$3B $3B

DIVE DEEPER: • 2023 Global Data Center Market Comparison • APAC, Americas, EMEA Data Center Updates





Source: Cushman & Wakefield Research

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