Who owns what?
Traditionally, development of data centres in Africa has been an owner/operator led exercise, however we are seeing more developer led projects.
Why is that?
In the broad sense there are two ways a development can be split:
Operator led – Where the data centre operator buys the land, designs the building, then engages contractor/s to build the data centre.
Developer led – There are various ways to do this, typically the developer is involved in building and/or owning part of the development, where the data centre operator is a tenant of the building.
Data centre operator typically have a long term view, hence they like to build and operate assets for a long time, given the investment involved and potential returns.
So why would they ever go the developer route?
Well, there are plenty of reasons, key ones being:
Risk mitigation – When entering new markets, if a data centre operator isn’t familiar with local construction industry, they can mitigate some of this risk by engaging a local developer to manage the build.
Access to key sites – in markets where land in the right area is scarce, data centre operators are sometimes forced to engage with developers if they want sites in these areas.
Capacity constraints – If demand for new space is greater that the data centre operator can deliver, outsourcing to a developer can help with this delivery constraint.
How do they go about it?
In an owner/operator led development the process is straight forward as the data centre operator manages the process from start to finish.
In a developer led arrangement the developer and data centre operator need to agree how the project will be split. Invariably this is an arrangement where they share development costs and/or ownership of the shell and core, while the data centre operator retains control and ownership of the fitout.
African examples
AWS Cape Town – Amazon has been present in Cape Town for a longtime, hence it is an operating environment they understand. So, when they built their data centres in Cape Town, they took the traditional approach where they sourced the land, managed the design, engaged contractors who built and handed over the sites.
Vantage Data Centres Johannesburg – For VDCs first data centre in Africa, they chose to engage with a local developer who had sites prepared for industrial development. Hence the time required to establish the site and start building was reduced, additionally the developer understood the local construction market and eased Vantage’s entry into this new market.
Where to now?
As the African data centre space grows, we see bigger and bigger data centre built and more international players enter, we will see more developer led facilities.