Data Centers Continue to Outdo Themselves
Data center developments are popping up left and right, and there are no signs of this trend slowing down. New players and mergers are becoming increasingly common. The performance in this sector has been so strong over the past few years that, despite its relative pre-maturity, people are not shying away from investments. Reports show that leasing in this sector hit “above the historical average,” averaging numbers higher than 500,000 square feet.
M&A has taken this sector by storm. With improved costs of capital for data center REITs, companies are increasingly excited about acquisitions. Demand is high and soon there won’t be many data center companies left to crack a deal with. Though it is important to note, development returns have proven to be higher than returns on acquisitions.
Regardless, it is safe to say that there won’t be a decrease in demand for technology anytime soon. This massive growing trend can explain low, and falling cap rates. More players mean higher value. This is definitely a sector to keep an eye on.
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