CBRE predicts that investment in data centers will increase in 2023

According to CBRE's 2023 Investment Sentiment Survey, we can anticipate that 89% of investors in the data center sector will increase their investment levels this year, following a relatively slow 2022. 85% of those who answered the survey have set aside more than $100 million, and 32% have over $500 million for the data center industry. The preponderance of interest is focused on turnkey hyperscalers, surpassing investments in powered shells for the first time. Within the next five years, the percentage of investors with less than 5% of their assets under management (AUM) in data centers is expected to drop to 16% from 37%.

This projected increase indicates the industry is rebounding after a financially difficult year, although the expected investment amount varies by region. Due to uncertain macroeconomic circumstances and rising interest rates, North American investment offerings slowed in the second half of 2022 and the first quarter of 2023. The total asset volume has decreased by approximately 26% year-over-year to $3.6 billion. Many investors are unwilling to sell due to the dearth of new core offerings and the anticipation of reduced interest rates. However, the rising demand and development costs will pressure businesses to monetize their existing assets.

Similarly, asset-level transactions in Europe, the Middle East, and Africa totaled $344.8 million in 2022, a decrease of 70% from 2021. Again, this was due to the present economic climate, with higher borrowing costs and a disruption in the debt markets due to inflation. As a result, CBRE has discovered that demand for assets worth $110 million or less has increased across EMEA, as these are less dependent on debt.