Thanks to long-term growth in demand, high interest in German locations, long-term leases, low vacancy risks and high, stable yields, data centers are developing into core assets. However, they must meet certain requirements in terms of structural design and sustainability requirements in order to be accepted by the municipalities.
Data center properties currently achieve dividend yields of 6 to 8 percent. A distinction must be made between two types of data center real estate:
- "Hyperscalers" typically have a large global corporation as a single tenant with 10- to 15-year leases. They are considered a safe investment. Accordingly, their returns are at the lower end of the yield spectrum.
- "Co-location data centers", on the other hand, work with up to 150 tenants. They require greater sales expenses, but also generate higher returns and also avoid the cluster risk and the associated risk of major simultaneous rent defaults.
Depending on the location and size of a data center, the range of investor groups ranges from financially strong investors from the USA to institutional investors and family offices.
The largest location in Germany with more than 80 data centers on 70 hectares of commercial space is the Frankfurt region, thanks in part to the stock exchange and the financial sector, which have a significant need for large amounts of data that must be available promptly. In the meantime, other cities and metropolitan areas such as Berlin, Munich and Düsseldorf are also experiencing a growing demand for land for the development of data centers. This is due, among other things, to the fact that customers want their data to be stored within the scope of the German legal system. Public administration is generating further sustainable demand on the way to digitization and AI with its ten to twenty times the need for computing power and storage space.
In many places, however, the expansion of data centers is still opposed by reservations on the part of politicians, administrators and residents. Points of criticism include energy requirements and structural design. In fact, data centers have improved significantly in terms of sustainability: On the one hand, the aim is to increase the use of electricity from renewable energies. On the other hand, data centers are large heat pumps, i.e. they turn electricity into heat that can be used sensibly. For example, around 3,000 apartments in Frankfurt's Gallus district are supplied with local heating from the waste heat of a data center, as is almost the entire neighboring city of Raunheim with just under 17,000 inhabitants.
And in terms of structural design, for example, there are attractive façade greening. Hybrid solutions are also possible. In Frankfurt, for example, there is a mixed building with a data center and a hotel that draws all its hot water from waste heat. Even residential uses on the upper floors of data centers can be realized with appropriate design.
Reservations on the part of the municipalities that data centers only generate jobs to a limited extent also fall short: In fact, they represent an important location factor for the surrounding economy and favor company settlements and thus an increase in trade tax revenue.
Result: For the success and acceptance of data centers, it is important to generate win-win situations "on site" as early as the planning stage and thus increase their acceptance.
