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Data Centre Blog 7.0 - Capex costs for Data Centres vary...
23 November 2020
Blog 7.0 - Capex costs for Data Centres vary considerably according to research from www.datacentrepricing.com (DCP). The FLAP European city Capex appear the highest, followed by Singapore & Hong Kong in Asia with a wide spread of Capex cost in the Americas.
Data Centre Capex build costs can be high, over USD $100 million for a 10 MW or 5,000 m2 Data Centre facility, but our research indicates a huge spread of costs.
DCP has analysed the published Capex costs of Data Centres across the EMEA, Asia Pacific & Americas regions to determine the average Capex build cost – and spread of Capex build costs per region. DCP has used the Capex costs revealed by Equinix (published in their Q3 2020 financial report) and other selected providers across the three regions of the EMEA, the Americas and the Asia Pacific showing 37 developments over a 2 year period.
DCP has used the data from Equinix to calculate the space per constructed Data Centre facility in m2 and the power available per facility (based on a provisional 1.5 kW power density per m2) to create an average build cost per MW and per m2 of raised floor space. The Capex build costs in the three regions - starting with the EMEA region - are shown below -
EMEA region Data Centre Capex Build Costs
Overall Europe appears to have the highest Data Centre Capex build costs. DCP has calculated the following average Capex build costs in the EMEA region –
- EMEA average per MW Data Centre Capex build costs = USD $20.6 million
- EMEA average per m2 Data Centre Capex build costs = USD $30,800 per m2
- EMEA Capex build cost spread of almost 10 times (from the lowest to highest cost)
Equinix has reported 19 Data Centre expansions across the EMEA region. Capex build costs range from USD $6 million (for the Stockholm-2 facility) up to USD $124 million (for the Zurich-5 facility). For the EMEA region the spread of Capex build costs per facility is shown in the chart below:
Source: DCP & Equinix (Sample size: 19 Data Centre facilities)
DCP has calculated the capex build costs of selected Data Centres (including facilities from xScale, Interxion and Advania Data Centres) in millions of USD per MW as shown in the chart in Figure 2 below
Source: DCP
The Capex build costs range from USD $9 million per MW (xScale in Paris) up to USD $22.5 million per MW (xScale in Slough) – both xScale facilities are being built in stages for Hyperscale clients.
Figure 3 – A picture showing the Equinix LD9 Slough facility (now called xScale London x9)
Source: DCD (from Google streetview)
Americas region Data Centre Capex build costs
From the Equinix sample the Americas Region has the 2nd highest regional Capex Data Centre build costs – lower than the EMEA Region. DCP has calculated the following average Capex Data Centre build costs in the Americas region –
- Americas average per MW Data Centre Capex build costs = USD $16.7 million per MW
- Americas average per m2 Data Centre Capex build costs = USD $24,900 per m2
- Americas Capex build cost spread of over 4 times (from the lowest to the highest cost)
Equinix have reported nine Data Centre expansions across the Americas region with Capex build costs ranging from USD $21 million (for the Toronto-2 facility) up to $95 million (for the Washington DC facility). The range of Equinix Capex build costs in millions of USD per MW per Americas region facility is shown in the chart in Figure 4 below –
Figure 4 – The range of Equinix Capex costs per MW in millions of USD for the Americas region
Source: DCP & Equinix (Sample Size: 9 Data Centres facilities)
Asia Pacific region Data Centre Development Costs
DCP has calculated the following approximate average Capex Data Centre build costs in the Asia Pacific region including –
- Asia Pacific average per MW Data Centre build costs = USD $15.1 million per MW
- Asia Pacific average per m2 Data Centre build costs = USD $22,700 per m2
- Asia Pacific Capex build cost of over 5 times (from the lowest to the highest cost)
Equinix reported nine Data Centre expansions across the Asia Pacific region with Capex build costs ranging from USD $49 million (Sydney-5 facility) up to USD $144 million (Singapore-5 facility).
In the Asia Pacific the range of Capex build costs per facility in millions of USD per MW is shown in the chart in Figure 5 below –
Figure 5 – The range of Equinix construction costs per MW in millions of USD for the Asia Pacific region
Source: DCP & Equinix (Sample Size: 9 Data Centres facilities)
Overall, the average cost of Data Centre build Capex is highest in the EMEA region followed by the Americas region and the Asia Pacific region.
To build new Data Centres a range of costs are involved in the Capex build cost which include the following variable factors -
- Land acquisition costs (with a premium paid for a site close to the city)
- Brownfield land clearance (with additional costs for clearing of the site)
- Construction costs (with additional costs depending on higher power densities)
The key variable is the land cost. Located close to a city area the Capex cost is relatively high, with the land costs being a premium. The first phase of the development includes carries the higher cost as it typically includes the overheads of power, ancillary areas and overall building frame for the whole building as well as the initial IT hardware data halls. Subsequent data halls can be added at lower incremental costs.
Examples of the initial phase Capex build cost in millions of USD for selected Equinix Data Centre facilities shown around the world in the table in Figure 6 below -
Figure 6 – A table showing the initial Capex cost for selected Equinix Data Centre facilities worldwide in millions of USD
Source: DCP & Equinix
The range of initial Data Centre build costs per MW ranges from USD $17.3 million (Frankfurt) up to USD $35 million (Bordeaux).
In practice the main determent of the total Data Centre cost is the land cost, with Data Centres in countries such as Singapore & Hong Kong with a shortage of building land charging higher rates.
In the table in Figure 7 below DCP shows a brief outline of a cost breakdown for Data Centre construction, adopted from a table presented by Digital Realty –
Figure 7 – A chart showing an outline of Data Centre construction costs in USD per m2
Source: DCP & Digital Realty
The key cities in Europe, including the London & Inner M25 area, Paris, Amsterdam & Frankfurt have higher Data Centre construction costs. And in Singapore and Hong Kong in Asia, where there is a shortage of land for development, Data Centre development costs are high and are increasing with more competition for land auctions.
For example, a plot of 9,000 m2 land at Sha Tin in the New Territories was sold to China Mobile in June 2020 for USD $925 million - the highest rate for Hong Kong industrial land at auction – receiving 8 other competitive bids.
In the UK in particular there is a shortage of new land for Data Centres, with facilities converted from other buildings including –
- Virtus Data Centres – Stockley Park, West London – Virtus converted distribution centres into Data Centre facilities.
- Ark Data Centres – Hayes, Bollo Bridge Industrial Estate, West London – Ark acquired existing industrial land to be called Union Park (at a development cost of GBP £600 (USD $791) million for the whole area including the Data Centre of up to 56,000 m2 of space).
Figure 8 – A picture showing an artist’s impression of the Ark Data Centres Hayes Bollo Bridge development
Source: Ark Data Centres
- Ark Data Centres – Park Royal, West London – acquired a Renault retail site for development from 2022 with a reported “asking price” of GBP £40 (USD $52.7) million for the site purchase.
As a result, the UK is seeing a range of high Capex build costs which will have an impact on future Data Centre costs – which are likely to increase pricing in the London area. According to Matthew Pullen, EVP & MD Europe for CyrusOne at a recent CBRE webinar, “in the past land costs were a rounding error in a cost model but now there is a growing divide between industrial land values and Data Centre land values in London which is not sustainable.”
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