Valuation of data centres

Published May 2011

Data centres were established in the 1990s in response to the rapidly growing demand for off-site data storage from commercial organisations and governments. More recently, developments in technology and innovations in the use of computers - for example, the introduction of social networking sites and the growth of video-on-demand (VOD) TV - have led to a expansion of data storage requirements. In a relatively short time period, data centres have become an essential element in the functioning of the modern world economy.

Occupiers' requirements in terms of power supply, security and data accessibility have meant that buildings used for the purpose of housing data centres have become highly specialised in terms of their location, construction, security and service requirements. The way in which these buildings generate income also differs from conventional commercial property. They have therefore become recognised as a distinct type of property in their own right, subject to a specific valuation approach.

Though vitally important in modern developed economies, the number of buildings used as data centres is relatively small. Transactional evidence can therefore be limited and this, coupled with the wide variation in facilities offered by individual units, means that valuation using conventionally gathered comparable evidence is often impossible.