Data Center Gold Rush: Why Everyone’s Buying Up Digital Real Estate
The global race to acquire data centers is showing no signs of slowing down, with 2024 shaping up to be another banner year for mergers and acquisitions. Driven by the insatiable demand for data storage and processing power, fueled by cloud computing, AI, and the ever-expanding digital universe, investors are scrambling to grab a piece of this lucrative market. While 2023 saw a slight dip in total deal value, a deeper dive reveals a steady stream of transactions, particularly among mid-sized players, indicating a robust and dynamic sector.
Why the Data Center Market Matters in 2024
This year has already witnessed significant activity, with $36.7 billion worth of deals closed and another $7.1 billion in the pipeline. This puts 2024 on track to potentially eclipse the $50 billion mark set in 2021 and 2022, years that were heavily influenced by a handful of mega-deals exceeding $10 billion each. These included Digital Realty’s acquisition of Interxion in 2019 for $8.4 billion, marking a significant consolidation in the European market. Such large-scale acquisitions reflect the strategic importance of data centers in today’s digital economy.
But it’s not just the giants making moves. A diverse range of players, from private equity firms to infrastructure funds and even telecommunications companies, are actively pursuing data center assets. This diversification is evident in recent deals like Brookfield’s acquisition of Data4 in Europe, a move that expanded their footprint in key European markets. Similarly, Deutsche Telekom is reportedly exploring the sale of a majority stake in its GD Towers unit, which includes its data center business, in a deal that could fetch around €18 billion. These transactions highlight the growing appeal of data centers as stable, long-term investments with strong growth potential.
And the action isn’t limited to billion-dollar behemoths. Smaller acquisitions are also fueling the trend. For example, Green Mountain, a Norwegian data center operator, acquired a data center in Oslo from Evry for an undisclosed sum, expanding its presence in the Nordic region. In the UK, VIRTUS Data Centres acquired two data centers from Infinity SDC, further consolidating its position in the London market. These smaller deals demonstrate the widespread interest in data center assets across various scales and geographies.
“The demand for data centers is just exploding,” says Kelly Morgan, Vice President of Datacenter Infrastructure at 451 Research, part of S&P Global Market Intelligence. “It’s driven by this perfect storm of cloud computing, the Internet of Things, and now, the rise of artificial intelligence. These technologies are generating massive amounts of data, and that data needs a place to live.”
This sentiment echoes throughout the industry, with executives recognizing the critical role data centers play in supporting the digital transformation of businesses and societies worldwide. As industries increasingly shift to digital-first models, the reliance on robust data center infrastructure has become more pronounced. Technologies such as 5G, edge computing, and blockchain are further accelerating this trend, amplifying the demand for high-capacity, low-latency facilities that can meet evolving needs.
The motivations behind these acquisitions are varied. For some, it’s about expanding capacity and geographical reach. For others, it’s about acquiring specialized expertise or gaining access to new technologies. And for many, it’s simply about securing a foothold in a rapidly growing market with attractive long-term prospects. Moreover, environmental concerns are shaping the market, with many investors prioritizing facilities powered by renewable energy to meet sustainability goals.
Regardless of the motivation, one thing is clear: the data center gold rush is in full swing, and it’s reshaping the landscape of the digital economy. From small regional operators to global giants, the race to secure and expand data center capacity reflects a broader shift toward a more interconnected and data-driven world. The question isn’t whether this trend will continue—it’s how rapidly it will evolve and who will emerge as the dominant players in this dynamic sector.
