At a glance
- Proximity to a data center was not part of the firm's apartment due diligence a year or two ago, Berg told IREI in an interview published Nov. 2.
- Whether it helps a submarket or hurts a property usually depends on distance and on who is paying for the infrastructure behind it.
- Berg said the new data-center line item adds two checklist inputs for allocators comparing apartment managers: residential sites that data center bids have removed from the build pipeline, and utility costs at the property.
Data center developers are paying 30 to 50 times what housing developers can pay for land in submarkets with heavy data center activity, according to Yisroel Berg, chief investment officer of multifamily at Harbor Group International.
Proximity to a data center was not part of the firm's apartment due diligence a year or two ago, Berg told IREI in an interview published Nov. 2. "Today, it is a standard line item," he said, adding that the firm assesses a nearby facility the way it treats a highway interchange, a distribution hub or a power plant. Whether it helps a submarket or hurts a property usually depends on distance and on who is paying for the infrastructure behind it.
Berg said the new data-center line item adds two checklist inputs for allocators comparing apartment managers: residential sites that data center bids have removed from the build pipeline, and utility costs at the property. The land figure is the harder of the two to work around, because a site that never reaches a housing developer never enters the supply pipeline at all. Berg put land and supply first among the factors the firm weighs, ahead of operating costs.
Reported by the Sectors desk from IREI. Published . Corrections