Five things the Gen+1 Elevate conference made clear about the data centre market
I attended the Gen+1 Elevate conference last week as part of the Forsters data centre team.
Demand for data centres is accelerating. That is no longer up for debate.
The more interesting question, and the clear theme from the panels, is whether projects can actually be delivered.
Across the panels, five themes stood out.
1. The real investment story is about execution, not yield
The numbers still work. Yields of 8-9%, and 5-7 year investment horizons continue to attract capital.
Investor focus, however, has clearly shifted.
The key question is no longer “should we invest?” but “can this scheme actually be built?”
That is driving a much sharper focus on:
- planning risk;
- power availability and timing; and
- delivery capability and access to labour.
The rise of joint ventures reflects this. Investors are increasingly looking to partner with operators, energy providers and developers to access expertise they do not have in-house.
Collaboration though brings complexity. Alignment of interests, exclusivity and the risk of partners becoming future competitors are now live issues that need to be addressed early.
2. The definition of a “good site” is changing rapidly
Five years ago, a data centre site had a relatively clear profile. That is no longer the case.
Constraints around power, land and scale are forcing developers to rethink location and design. Sites that would previously have fallen outside the investable universe are now being revisited.
Flexibility is becoming the defining characteristic.
There was also a degree of realism in the room. Certain trends, particularly around modular solutions and aspects of the AI ecosystem, were openly described as over-hyped. The expectation is that the market will consolidate, with a limited number of long-term winners.
3. Power is no longer a constraint. It is the constraint
Every conversation ultimately came back to power.
The gap between demand and available capacity is now well understood. What is less well understood is the complexity behind it.
As we are seeing on our projects, “having power” is not a binary issue. It raises a series of more difficult questions:
- when will it be available;
- how reliable is it; and
- what infrastructure is required to support it.
Operators are responding in different ways. Some are exploring on-site, behind the meter, generation and alternative energy solutions. Others are seeking greater control of their supply chain to reduce reliance on constrained infrastructure.
The conclusion is clear. Power availability, in both timing and structure, is now the single biggest factor in determining whether a project proceeds.
4. The delivery model is under strain
Even where land and power are secured, delivery is far from straightforward.
Supply chains are stretched, with long lead times for key components, including fibre. At the same time, there is a growing disconnect between leasing expectations and construction timelines.
The industry is also facing a significant skills gap. Quite simply, there are not enough people to build what is currently in the pipeline.
In response, operators are:
- bringing parts of the supply chain in-house;
- increasing use of prefabrication; and
- using AI to improve productivity and safety.
These are mitigation strategies rather than solutions. Delivery risk remains a core issue.
5. Planning and perception are becoming commercial issues
Planning is no longer just a legal or regulatory hurdle. It is a commercial one.
There is increasing scrutiny of how data centres are perceived at the development stage, particularly in relation to energy use and pressure on infrastructure.
At the same time, the industry is not always effective at communicating the value data centres generate. The economic impact of large-scale schemes is significant, but often poorly understood outside the sector.
This is creating a need for better engagement, clearer messaging and a more coordinated approach to how the industry presents itself.
What this means for clients
The takeaway is clear. Demand is not the problem. Delivery is.
For investors, developers and operators, that shifts the focus to execution from the outset. In practical terms, that means:
- Front-loading strategy so that planning risk, power timelines and deliverability are assessed early;
- Structuring partnerships carefully, with clear alignment on roles, risk and long-term strategy;
- Taking a holistic view of viability, recognising that land, planning, power and infrastructure need to be considered together;
- Actively managing delivery risk, particularly in relation to supply chain, skills and program assumptions;
- Retaining flexibility, both in site strategy and structuring, as requirements continue to evolve.
The projects that succeed will not necessarily be those with the best sites or the strongest demand. They will be the schemes where planning, power, capital and capability are aligned from day one.
That alignment is now where the real value sits.
If any of these themes resonate, get in touch with Forsters’ data centre team. We are already advising on these challenges across a range of projects and bring the depth of experience needed to deliver them successfully.
Subcribe to news and viewsDemand is not the issue. Delivery is. Five practical takeaways from Gen+1 Elevate on what is really driving the data centre market.
