Segro Shifts Data Centre Strategy to Capitalize on AI Boom
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UK's Segro plans data centre strategy shift as AI booms
(Reuters) - Segro, which has historically offered data centres equipped only with power connections, plans to develop full-fledged facilities to directly serve major cloud providers like Amazon, Microsoft, and Alphabet's Google in a bid to shore up rental income. The largest-listed European property company is looking to capitalise the surge in demand for data centres, a trend fuelled by the growing reliance on AI systems, which require specialised infrastructure like high capacity power supply and advanced cooling systems. Typically, Segro leases out data centres to firms that add infrastructure such as chillers, generators, and dividing walls before sub-leasing to tech companies, which then add their own technology. Under the new strategy, the London-based company will lease data centres fitted with required infrastructure directly to end users. "A 'powered shell' might cost 50 million pounds ($62.9 million) to build, whereas a 'fully fitted' data centre could require around 500 million pounds. However, rental income could jump from 5 million pounds to 50 million pounds," Segro CFO Soumen Das told Reuters. Segro currently earns about 650 million pounds in annual rent from its broader portfolio, and Das added that a single fully fitted data centre would have a noticeable impact on overall revenue. The group, which mainly owns big box and urban warehouses among other assets, has 34 'powered shells', all in London and Slough, accounting for 8% of its overall portfolio. The London- and Paris-listed firm said it is planning for its new data centres to also incorporate 'fully fitted' facilities, but did not provide additional details or a timeline. However the new strategy comes with a trade-off, with Das saying fully fitted spaces would depreciate faster than the 'powered shells', potentially impacting long-term performance. (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Tasim Zahid)
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UK's Segro Plans Data Centre Strategy Shift as AI Booms
(Reuters) - Segro, which has historically offered data centres equipped only with power connections, plans to develop full-fledged facilities to directly serve major cloud providers like Amazon, Microsoft, and Alphabet's Google in a bid to shore up rental income. The largest-listed European property company is looking to capitalise the surge in demand for data centres, a trend fuelled by the growing reliance on AI systems, which require specialised infrastructure like high capacity power supply and advanced cooling systems. Typically, Segro leases out data centres to firms that add infrastructure such as chillers, generators, and dividing walls before sub-leasing to tech companies, which then add their own technology. Under the new strategy, the London-based company will lease data centres fitted with required infrastructure directly to end users. "A 'powered shell' might cost 50 million pounds ($62.9 million) to build, whereas a 'fully fitted' data centre could require around 500 million pounds. However, rental income could jump from 5 million pounds to 50 million pounds," Segro CFO Soumen Das told Reuters. Segro currently earns about 650 million pounds in annual rent from its broader portfolio, and Das added that a single fully fitted data centre would have a noticeable impact on overall revenue. The group, which mainly owns big box and urban warehouses among other assets, has 34 'powered shells', all in London and Slough, accounting for 8% of its overall portfolio. The London- and Paris-listed firm said it is planning for its new data centres to also incorporate 'fully fitted' facilities, but did not provide additional details or a timeline. However the new strategy comes with a trade-off, with Das saying fully fitted spaces would depreciate faster than the 'powered shells', potentially impacting long-term performance. ($1 = 0.7948 pounds) (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Tasim Zahid)
[3]
UK's Segro plans data centre strategy shift as AI booms
Feb 14 (Reuters) - Segro (SGRO.L), opens new tab, which has historically offered data centres equipped only with power connections, plans to develop full-fledged facilities to directly serve major cloud providers like Amazon, Microsoft (MSFT.O), opens new tab, and Alphabet's (GOOGL.O), opens new tab Google in a bid to shore up rental income. The largest-listed European property company is looking to capitalise the surge in demand for data centres, a trend fuelled by the growing reliance on AI systems, which require specialised infrastructure like high capacity power supply and advanced cooling systems. Typically, Segro leases out data centres to firms that add infrastructure such as chillers, generators, and dividing walls before sub-leasing to tech companies, which then add their own technology. Under the new strategy, the London-based company will lease data centres fitted with required infrastructure directly to end users. "A 'powered shell' might cost 50 million pounds ($62.9 million) to build, whereas a 'fully fitted' data centre could require around 500 million pounds. However, rental income could jump from 5 million pounds to 50 million pounds," Segro CFO Soumen Das told Reuters. Segro currently earns about 650 million pounds in annual rent from its broader portfolio, and Das added that a single fully fitted data centre would have a noticeable impact on overall revenue. The group, which mainly owns big box and urban warehouses among other assets, has 34 'powered shells', all in London and Slough, accounting for 8% of its overall portfolio. The London- and Paris-listed firm said it is planning for its new data centres to also incorporate 'fully fitted' facilities, but did not provide additional details or a timeline. However the new strategy comes with a trade-off, with Das saying fully fitted spaces would depreciate faster than the 'powered shells', potentially impacting long-term performance. ($1 = 0.7948 pounds) Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Tasim Zahid Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence
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Segro, Europe's largest listed property company, plans to develop fully-fitted data centres to directly serve major cloud providers, responding to increased demand driven by AI systems.
Segro's Strategic Shift in Data Centre Development
Segro, Europe's largest listed property company, is set to make a significant shift in its data centre strategy in response to the booming artificial intelligence (AI) industry. The company, which has traditionally offered data centres equipped only with power connections, now plans to develop full-fledged facilities to directly serve major cloud providers such as Amazon, Microsoft, and Google
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.Capitalizing on AI-Driven Demand
The surge in demand for data centres is largely fueled by the growing reliance on AI systems, which require specialized infrastructure including high-capacity power supply and advanced cooling systems. Segro aims to capitalize on this trend by adapting its business model to meet the evolving needs of the tech industry
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.Current Business Model vs. New Strategy
Historically, Segro has leased out "powered shells" - data centres equipped only with power connections. These facilities are then leased to firms that add necessary infrastructure such as chillers, generators, and dividing walls before sub-leasing to tech companies. Under the new strategy, Segro will lease fully fitted data centres directly to end users, eliminating the middleman and potentially increasing its rental income significantly
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.Financial Implications
Segro's CFO, Soumen Das, provided insight into the financial aspects of this strategic shift:
- A 'powered shell' costs approximately £50 million ($62.9 million) to build
- A 'fully fitted' data centre could require an investment of around £500 million
- Potential rental income could increase from £5 million to £50 million per facility
Given that Segro currently earns about £650 million in annual rent from its broader portfolio, Das noted that even a single fully fitted data centre would have a noticeable impact on overall revenue
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Current Portfolio and Future Plans
Segro's existing portfolio includes 34 'powered shells', all located in London and Slough, accounting for 8% of its overall assets. While the company has announced plans to incorporate 'fully fitted' facilities in its new data centres, specific details and timelines have not been provided
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.Potential Trade-offs
While the new strategy promises higher rental income, it also comes with certain risks. Das acknowledged that fully fitted spaces would depreciate faster than the 'powered shells', which could potentially impact long-term performance. This trade-off highlights the complex decisions property companies must make in adapting to the rapidly evolving tech landscape
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