Members across our real estate, construction and corporate teams recently attended the BisNow Conference: “UK Data Centre Series: Investment and Development” and came away struck by just how significantly the data centre sector is reshaping the UK real estate landscape. What follows are some of the key themes that emerged, and why they are quickly becoming a priority for every property professional.
A Market Transformed
At a time where real asset capital is understandably so cautious, the sheer scale of capital flowing into this sector is noteworthy. DigitalBridge reported closing £80 billion of financing across its data centre platforms last year, with £40 billion of that in a single deal. Data centres have evolved from a niche asset class into nationally critical infrastructure, and the customer base is diversifying rapidly beyond the established hyperscalers to include AI labs and neo-cloud providers.
Yet for all the enthusiasm, a note of caution was raised. Technology cycles are compressing dramatically, chip generations that once lasted three to four years are now turning over every six months, and speakers warned of the risk of a future "Kodak moment" for facilities that fail to keep pace.
Beyond London
Currently, around 80% of UK compute sits in London however this is now changing. Google’s Jess Simmonds highlighted the more scalable opportunities emerging in the Northeast and Wales, where government initiatives may help ease development. There is also growing interest in on-campus developments adjacent to universities and life sciences hubs, creating smaller-scale but strategically located facilities.
A topic of particular interest for real estate practitioners is the conversion of existing industrial sheds. Sarah Wilkinson of VGP Developments described this as a "super interesting opportunity" that could bring more participants from the real estate sector into the data centre journey. However, it is far from straightforward — industrial slabs are not built to accommodate the five to ten times increase in loading requirements associated with data centre equipment, meaning substantial structural upgrades are needed.
The Power Problem
If there was one dominant theme at the conference, it was unsurprisingly power. The UK grid connection queue currently stands at approximately 140 gigawatts of demand against a peak national capacity of around 50 gigawatts, pushing reliable connection timelines out as far as 2036. This bottleneck is fundamentally changing the development model. On-site power generation is no longer a backup plan but a core component of the business case, alongside growing calls for a national strategy to co-locate data centres in areas of curtailed renewable energy, positioning them as assets to the grid rather than a strain on it.
What This Means for Real Estate
Several practical points stood out. First, speed to market has replaced cost as the primary driver for clients – what was once an ambitious 24-month programme is now a standard 18-month delivery. Second, the traditional "five nines" availability model is being challenged as hyperscalers shift towards software-based resilience, which will require SLAs and contracts to evolve accordingly. Third, developers pursuing co-location with renewable energy sources must conduct thorough due diligence on output consistency and establish clear contractual frameworks for power delivery.
For those of us in real estate, the data centre sector presents extraordinary opportunities, but they come with an uncommon complexity that demands specialist knowledge across planning, construction, energy and technology. It is a space well worth watching. For more on Fladgate’s multidisciplinary data centre group and capabilities, see here.
