Segro, historically providing data centers with only power connections, intends to develop full-fledged facilities to directly cater to major cloud providers like Amazon, Microsoft, and Alphabet's Google to strengthen rental income.
The largest-listed European property company aims to leverage the increasing demand for data centers driven by the growing reliance on AI systems, which necessitate specialized infrastructure such as high-capacity power supply and advanced cooling systems.
Segro typically leases out data centers to firms that equip them with infrastructure like chillers, generators, and dividing walls before sub-leasing to tech companies to add their own technology.
Under the new strategy, the London-based company will lease data centers already fitted with the necessary infrastructure directly to end users.
According to Segro CFO Soumen Das, a "fully fitted" data center could cost around 500 million pounds to build, but rental income could increase significantly from 5 million pounds to 50 million pounds.
With an annual rent income of about 650 million pounds from its broader portfolio, Das mentioned that a single fully fitted data center would noticeably impact overall revenue.
As the group owns mainly big box and urban warehouses along with other assets, it currently has 34 'powered shells' in London and Slough, constituting 8% of its portfolio.
While planning for the new data centers to also include 'fully fitted' facilities, the London- and Paris-listed firm did not disclose further details or a timeline.
However, Das cautioned that fully fitted spaces might depreciate faster than the 'powered shells', potentially affecting long-term performance.