The global shift toward digital operations has positioned data centers as a critical backbone across many industries, such as agriculture, banking, inventory, defense, mining and healthcare. A recent NEWMARK study projects that global data center demand will double by 2030. In the US alone, there is an oversupply of office space, creating a compelling opportunity to repurpose underused properties into modern data centers.
These conversions require a clear understanding of the complex infrastructure demands that define data center operations. Below is a brief overview of these requisites and how to evaluate a buildings potential for data center use.
What Drives Data Center Leasing? A Closer Look at Capacity and Redundancy
Unlike traditional real estate, data center leases are driven by power usage rather than just square footage. Tenants typically lease based on the amount of power consumed, the physical space required and related operational services such as security and maintenance. Because uninterrupted service is essential, redundancy in both power and cooling systems is critical.
The more sensitive the data, the more redundancy required, which in turn increases the lease rate. These performance standards are formally outlined in a Service Level Agreement (SLA), which defines key metrics such as uptime, security protocols, and maintenance requirements. The SLA also specifies each party's responsibilities for maintaining those standards and outlines liability in the event of a service disruption.
Key Considerations for Converting Offices Into Data Centers
A building's potential for data center use depends on its ability to deliver adequate power and cooling with structural integrity and resiliency. This can be evaluated through a well-scoped Property Condition Assessment (PCA) and feasibility study.
Because electrical supply and cooling systems are crucial for data centers, a Mechanical-Electrical-Plumbing (MEP) assessment is fundamental. An MEP specialist can confirm electrical capacity for the proposed project, create an inventory of current equipment, assess the condition of each asset and provide a capital budget for deferred maintenance as well as a replacement schedule for these assets.
Power requirements sometimes necessitate relocating or adding a substation to adequately support the project. Because data centers require continuous, uninterrupted power, their electrical systems must include an uninterruptible power supply (UPS) capable of delivering near instant backup in the event of an outage. The MEP specialist will assess the UPS's current condition, estimate its remaining useful life, and provide a replacement cost and maintenance schedule as part of the evaluation.
The MEP specialist also reviews cooling systems, not only for the capacity and performance but for energy efficiency, as cooling can account for up to half of a data center's total energy consumption. Recommendations may include system upgrades or replacements to improve efficiency and enhance net operating income (NOI). The assessment should also identify the location of existing water lines to prevent critical equipment from being placed beneath them or, if unavoidable, to design secondary containment in case of a leak.
The condition of the roof and building envelope is critical. While water intrusion can compromise any building's structure, in a data center it poses additional risks. Damaging sensitive equipment, causing short circuits or even triggering fires are some examples that threaten operational continuity. Engaging a building envelope specialist is essential to evaluate these systems and identify potential vulnerabilities.
When assessing structure and space allocation, it is important to plan equipment placement carefully. Questions to consider include:
- Where will the computer room and MEP room(s) be located?
- Is the floor-to-ceiling height adequate?
- Does the structural load capacity of the floors and roof meet the requirements of heavy equipment?
Finally, climate and seismic resilience must be evaluated. A Property Resilience Assessment (PRA), conducted alongside the PCA, analyzes site-specific vulnerabilities to severe weather and natural disasters by combing regional climate data with on-site characteristics. The PRA also provides recommendations for strengthening the building's overall resiliency.
A Partner Case Study
A real estate investment group engaged Partner Engineering and Science, Inc. to conduct a data center conversion feasibility assessment for a multi-building business park in the Memphis metropolitan area with a total of approximately 400,000 gross square feet. The study evaluated eight critical components, ranging from network connectivity and power capacity to data center market conditions, zoning and scalability, to determine the site's readiness for adaptive reuse.
Partner's analysis found the property well-positioned for data center operations, with access to multiple fiber providers, strong power infrastructure and minimal environmental risk. The results demonstrated a potential 400% increase in property value with a conversion cost of only 22% of the existing value, showcasing a highly attractive investment opportunity in a growing regional data center market.
Your Conversion Roadmap: Where to Go From Here
If you believe your building could be a strong candidate for data center conversion, engage a qualified engineering consultant experienced in MEP, Fire Life Safety, building envelope and resiliency systems, particularly those with proven data center expertise. These specialists can evaluate your building's current condition, identify the upgrades required to meet operational standards and provide clear guidance on feasibility and cost.
Comprehensive, well-scoped assessments deliver the critical data needed to make informed, strategic decisions about your asset and its alignment with your broader business objectives.
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